Question

12. What is the present value of Rs.13440 to be received after 2.5 years at 12 % compounded quarterly ? [(1.03)10 = 1.3440 (1.12)2.5 = 1.3275] (a) Rs 10000 (b) Rs 9000 (c) Rs 110000 (d) None​

Answer 1

Answer:

Given, A= Rs 500, n=8

Also, r=1008×41=0.02

∴V=rA×[1−(1+r)(−n)]=0.02500×[1−(1.02)(−8)]

Now, let x=(1.02)(−8)

⇒logx=−8log1.02=−8(0.0086)

⇒logx=−0.0688

⇒x=0.8535

⇒V=0.02500×[1−0.8535]= Rs. 3662.50

Thus, the present value of annuity is Rs. 3662.50.