Mathematics for FinanceMTP Jun 23 Series IIQuestion 1524 of 512
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The amount of an annuity due consisting of 15\displaystyle 15 annual payments invested at 8%\displaystyle 8\% effective is 10,000\displaystyle 10,000. Find the size of each payment:

Options

A373.86\displaystyle 373.86
B308.60\displaystyle 308.60
C341.01\displaystyle 341.01
DNone of these
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Correct Answer

✅ Option c — 341.01\displaystyle 341.01

All Options:

  • A373.86\displaystyle 373.86
  • B308.60\displaystyle 308.60
  • C341.01\displaystyle 341.01
  • DNone of these

Detailed Solution & Explanation

The future value of an annuity due is: FVdue=A[(1+i)n−1i]×(1+i)FV_{\text{due}} = A \left[ \frac{(1+i)^n - 1}{i} \right] \times (1+i) Given: * Future Value (FVdue\displaystyle FV_{\text{due}}) = 10,000\displaystyle 10,000 * Time (n\displaystyle n) = 15\displaystyle 15 years * Interest rate (i\displaystyle i) = 8%\displaystyle 8\% p.a. = 0.08\displaystyle 0.08 Substituting the values: Annuity factor=(1.08)15−10.08×1.08≈3.172169−10.08×1.08=27.1521×1.08=29.32427\text{Annuity factor} = \frac{(1.08)^{15} - 1}{0.08} \times 1.08 \approx \frac{3.172169 - 1}{0.08} \times 1.08 = 27.1521 \times 1.08 = 29.32427 A=10,00029.32427≈341.01A = \frac{10,000}{29.32427} \approx 341.01 This matches Option C (341.01\displaystyle 341.01). Hence, **Option C** is the correct answer.

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