CA Foundation · Quantitative Aptitude · Mathematics of Finance
Meera wants to build a fund of ₹3,31,000 at the end of 3 years. She will deposit a fixed sum at the beginning of each year for 3 years in a scheme paying 10% per annum compounded annually. What yearly deposit is required?
The required yearly deposit is about ₹90,909. Deposits at the beginning of each year form an annuity due, with factor 1.1 × 3.31 = 3.641. Dividing the target ₹3,31,000 by 3.641 gives roughly ₹90,909, lower than the ordinary-annuity deposit of ₹1,00,000.
- A₹1,10,000
- B₹1,10,333
- C₹1,00,000
- D₹90,909 (approx.)Correct
Explanation
Annuity due factor = 1.1 × 3.31 = 3.641, so P = 3,31,000/3.641 ≈ ₹90,909. Using the ordinary-annuity factor 3.31 gives ₹1,00,000, which ignores that each deposit is made a year earlier. Multiplying by 1.1 instead of dividing gives ₹1,10,000.
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