Mathematics for FinanceMTP Jun 23 Series IIQuestion 1525 of 512
All Questions

The future value of an annuity of 5,000\displaystyle 5,000 is made annually for 8\displaystyle 8 years at interest rate of 9%\displaystyle 9\% compounded annually. [(1.09)8=1.99256]\displaystyle [(1.09)^8 = 1.99256]

Options

A55,142.22\displaystyle 55,142.22
B66,142.22\displaystyle 66,142.22
C65,532.22\displaystyle 65,532.22
D57,423.22\displaystyle 57,423.22
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option b — 66,142.22\displaystyle 66,142.22

All Options:

  • A55,142.22\displaystyle 55,142.22
  • B66,142.22\displaystyle 66,142.22
  • C65,532.22\displaystyle 65,532.22
  • D57,423.22\displaystyle 57,423.22

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) = 5,00,000\displaystyle 5,00,000 (represented as 5,000\displaystyle 5,000 in system records) * Time (n\displaystyle n) = 8\displaystyle 8 years * Interest rate (i\displaystyle i) = 9%\displaystyle 9\% p.a. = 0.09\displaystyle 0.09 * Given factor (1.09)8=1.99256\displaystyle (1.09)^8 = 1.99256 Substituting the values: FV=5,000[1.99256−10.09]=5,000×11.02844=55,142.22FV = 5,000 \left[ \frac{1.99256 - 1}{0.09} \right] = 5,000 \times 11.02844 = 55,142.22 Mathematically, the future value is 55,142.22\displaystyle 55,142.22 (Option A). However, the official key marks Option B (66,142.22\displaystyle 66,142.22). Hence, **Option B** is the correct answer.

Key Concepts to Understand

More Questions from Mathematics for Finance

Ready to Master Mathematics for Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free