ANNUITY QUESTIONS FOR

APTITUDE TESTS

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
www.afterschoool.tk
mobile : 91+9414430763

5 DECEMBER 09 www.afterschoool.tk 1
Life of a machine=20years, new machine
would cost 780000, sinking fund has to be
created for replacement. Scrap
value=20000, interest = 14% suggest
annuity ?
Amount=annuity/r((1+r)^n – 1)
760000=a/.14 * ((1.14)^20 – 1)
a=106400/12.8
=8350 per annum answer.

5 DECEMBER 09 www.afterschoool.tk 2
 Find present worth of annuity of
1000 per annum for 14 years.
Interest rate : 10%,

Present worth=annuity/rate (1- (1+rate)^-n)

=1000/.1 * (1-(1.1)^-14)
=7367 answer.

5 DECEMBER 09 www.afterschoool.tk 3
 400000 to be paid on monthly
instalments in 3 years, rate 15%,
payment in the beginning of the
month, find instalment
Present value=annuity/rate (1+rate)(1-
(1+rate)^-n
rate = 15/(12*100) = .0125
400000=a/.0125 * (1.0125)(1-(1.0125)^-36)
=13695 answer

5 DECEMBER 09 www.afterschoool.tk 4
 Rishi buys a TV in 48000 on
instalments. 8000Downpayment and
remaining in 15 instalments. Rate :
18%. find annual instalment
Present value=annuity/rate (1+rate)(1-
(1+rate)^-n
rate = 18/(100) = .18
40000=a/.18 * (1-(1.18)^-15)
= 7856 answer

5 DECEMBER 09 www.afterschoool.tk 5
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