1.

What equal annual payment will discharge a debt of rs. 1696 due in 4 years at 4% per annum?

Answer»

Given Future value=1696
Time= N =4
Rate of INTEREST Per annum= R = 4

we know that

Future value of ANNUITY =p [ (1+r)^n -1)/r)
1696 = p[(1+4/100)^4 -1)/ 4/100]
1696 = p[ (1 + 0.04)^4 - 1) / 0.04]
1696 = p[(1.04)^4-1)/0.04]
1696 = p[ 1.16985856 -1)/0.04]
1696 = p[0.16985856/0.04)
1696×0.04/0.16985856 =p
400=P is the periodic payment that should be MADE to clear the loan of 1696.



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