Mathematics · Financial Mathematics
An infrastructure company, 'Build-India Corp,' needs to accumulate 10,00,00,000 (10 crore) rupees to replace heavy machinery at the end of 4 years. The company's treasury department evaluates two options to build this sinking fund: Option A: Deposit a fixed amount at the end of every quarter in an account that pays 8 percent per annum compounded quarterly. Option B: Deposit a fixed amount at the beginning of every quarter in the same account. Calculate the quarterly installments and total interest earned for both options. (Use: For 16 periods at 2% per period, the Future Value Ordinary Annuity Factor is 18.6393).
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Option A Installment: 25,00,000; Option B: 24,00,000; Int A: 6,00,00,000; Int B: 6,16,00,000.
- 2Option A Installment: 62,50,000; Option B: 60,00,000; Int A: 0; Int B: 40,00,000.
- 3Option A Installment: 53,65,013; Option B: 52,59,816; Int A: 1,41,59,792; Int B: 1,58,42,944.✓
- 4Option A Installment: 53,65,000; Option B: 52,59,800; Int A: 1,41,60,000; Int B: 1,58,43,200.
Correct answer
Option A Installment: 53,65,013; Option B: 52,59,816; Int A: 1,41,59,792; Int B: 1,58,42,944.
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