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EMI Computation and Future Value of Annuity

   

Added on  2023-01-19

5 Pages658 Words75 Views
MASTER OF ACCOUNTING-STATS
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EMI Computation and Future Value of Annuity_1
Question 1
The requisite formula for EMI computation is shown below.
For the given scenario, P = $ 1,000,000, R = 6% p.a. or 0.5% per month, N= 30 years or 360
months
Hence, EMI = (1000000*0.005*1.005360)/(1.005360-1) = $5,995.51
Question 2
a) Effective annual interest rate = (1 + (12/200))2 -1 = 12.36%
b) Effective annual interest rate = (1 + (12/400))4 -1 = 12.55%
c) Effective annual interest rate = (1 + (12/36500))365 -1 = 12.75%
d) Effective annual interest rate = (e0.12) -1 = 12.77%
Question 3
The relevant formula for determining future value of annuity is indicated below.
a) Here P= $1,000, r= 12% p.a., n=3
Hence, FV of annuity at the end of three years = 1000*(1.123-1)/0.12 = $3,374.4
b) Here P= $1,000, r= 12% p.a., n=5
EMI Computation and Future Value of Annuity_2

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