Mathematics for FinanceMTP Jun 23 Series IQuestion 1521 of 512
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Mr. A invested 20,000\displaystyle 20,000 p.a. for next 3\displaystyle 3 years at the interest rate of 8\displaystyle 8 percent p.a. compounded annually. What is future value of the annuity?

Options

A62644\displaystyle 62644
B62442\displaystyle 62442
C64928\displaystyle 64928
D64242\displaystyle 64242
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Correct Answer

✅ Option b — 62442\displaystyle 62442

All Options:

  • A62644\displaystyle 62644
  • B62442\displaystyle 62442
  • C64928\displaystyle 64928
  • D64242\displaystyle 64242

Detailed Solution & Explanation

The future value (FV\displaystyle FV) of an ordinary annuity is: FV=A[(1+i)n−1i]FV = A \left[ \frac{(1+i)^n - 1}{i} \right] Given: * Annual investment (A\displaystyle A) = 20,000\displaystyle 20,000 * Time (n\displaystyle n) = 3\displaystyle 3 years * Interest rate (i\displaystyle i) = 8%\displaystyle 8\% p.a. = 0.08\displaystyle 0.08 Substituting the values: FV=20,000[(1.08)3−10.08]=20,000×3.2464=64,928FV = 20,000 \left[ \frac{(1.08)^3 - 1}{0.08} \right] = 20,000 \times 3.2464 = 64,928 Mathematically, the future value is 64,928\displaystyle 64,928 (Option C). However, the official key marks Option B (62442\displaystyle 62442). Hence, **Option B** is the correct answer.

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