Question

A company sets aside sum of rs 5000 annually for 10 years to pay off a debentures issue of rs 60000 .if the fund accumulates at 5% per years compound interest.find the surplus after redemption of the debentures issue​

Answer 1

Answer:

P= Principal investment amount = Rs. 5000

T= Tenure = 10 years.

R = Annual Interest Rate = 5% =.05

N=The number of times that interest compounds in a year = 1

Consider

The future value of the investment, including interest  is = A

We know that,

A = P x (1 + R/N) (N x T)

⇒A = 5000 x (1 + .05/1) (1 x 10)

⇒A = 5000 x (1.05)^10 = 8144

Therefore, The value of the investment, including interest  is =Rs. 8144

Total amount to pay off = Rs. 60000

To fulfill the value = Rs.(60000-5844)= Rs. 54156 is required.

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Answer 2

there there for the value of the investment including interest is rupees. 8144