Home Class 11 Applied Maths Chapter 13: Interests and Annuities
CBSE Applied Maths (2026-27) Unit VI: Basics of Financial Mathematics Weightage: ~15 Marks in Unit

Chapter 13: Interests and Annuities

Master compound interest compounding intervals, continuous compounding, nominal vs effective rates, ordinary/due annuities, and loan EMI schedules.

4 Exercises
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Chapter Exercises & Topics

Select any exercise to access theory notes, formulas, practice drills, and mini tests.

Exercise 13.1 45 mins

Interest Calculations

  • Simple interest review: I = Prt / 100
  • Compound interest with varying compounding periods (annual, semi-annual, quarterly, monthly)
  • Concept of continuous compounding: A = P ยท ert
  • Nominal rate versus Effective Annual Rate (EAR): EAR = (1 + r/m)^m - 1
Study Exercise Mini Test
Exercise 13.2 45 mins

Annuities

  • Meaning and classification of annuities
  • Ordinary annuity (annuity immediate) - payments at end of period
  • Annuity due - payments at beginning of period
  • Deferred annuity and Perpetuity
Study Exercise Mini Test
Exercise 13.3 45 mins

Valuation of Annuities

  • Present value (PV) and Future value (FV) of ordinary annuities
  • Present value and Future value of annuity due
  • Present value of perpetuity (PV = R / i)
Study Exercise Mini Test
Exercise 13.4 45 mins

Practical Financial Applications

  • Sinking funds and capital recovery
  • Loan amortization schedules
  • Equated Monthly Installment (EMI) calculations using formula and tabular breakdown
Study Exercise Mini Test

Chapter 13 Core Formula Sheet

Quick-glance formula revision for examination and numerical problem-solving:

  • $$A = P(1 + rm)mt, \quad A = P ert (Continuous)$$
  • $$EAR = (1 + rm)^m - 1, \quad reffective = e^r - 1$$
  • $$Ordinary Annuity: Cash flow at period END$$
  • $$Annuity Due: Cash flow at period BEGINNING$$
  • $$Perpetuity: Infinite stream of periodic payments$$
  • $$FV = R [(1+i)^n - 1i], \quad PV = R [1 - (1+i)-ni]$$
  • $$PVdue = PVordinary × (1+i), \quad PVperpetuity = Ri$$
  • $$EMI = P × r × (1+r)^n(1+r)^n - 1$$
  • $$Sinking Fund Payment: R = A × i(1+i)^n - 1$$
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