Question

2. Find present value of Rs.1 due after 2 years @ 10% p.a compounded annually.
a. Rs.0.84
b. Rs.0.82
c. Rs.0.83
d. Rs.0.81​

Answer 1

Answer:

Calculate:

Principal (P)

Where: P = A / (1 + r/n)^(nt)

Total P+I (A): $ 1.00

Rate (R): % 10

Compound (n): Compounding Annually (1/Yr)

Time (t in years): 2

Answer:

P = 1/ (1 + 10/2)^(2)

P= 1/(6)^2

P = $ 0.83

Answer 2

Answer:

c. Rs.0.83

Present value is Rs. 0.83

Step-by-step explanation:

Given :

Future value (A) = Rs. 1

Time (n) = 2 years

Rate (r) = 10% p.a compounded annually

To find :

present value (P)

Solution :

★ A = P (1 + r)ⁿ

⇒ 1 = P (1 + 0.1)²

⇒ 1 = P (1.1)²

⇒ 1 = P × (1.21)

⇒ 1 / 1.21 = P

⇒ P = 1 / 1.21

⇒ P = 0.83

Therefore,

present value is Rs. 0.83