A man has to set up a sinking fund in order to gave ₹50,000 in 10 years for his son's higher education. The amount he has to set aside at the end of every month into the fund paying 6% p.a. compounded monthly is :
(Given$ (1.005)^{120}=1.8193)$
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹305.13
The future value of an annuity is,
$FV=P×\frac{(1+r)^n-1}{r}$
$⇒P=\frac{FV×r}{(1+r)^n-1}=\frac{50,000×0.005}{(1.005)^{120}-1}$
$=\frac{250}{0.8914}≃₹305.13$