Question

According to an investment proposal, an initial investment of Rs. 1,00,000 is expected to

yield a uniform income stream of Rs. 10,000 per annum. If money is worth 8% per annum

compounded continuously, what is the expected payback period, i.e, after what time, the initial

investment will be recovered?​

Answer 1

you search it on Google also OK

Answer 2

Given :-

• Future investment value = Rs.100000
• Present investment value = Rs.10000
• Rate = 8% per annum compounded annually .

To Find :-

• After what time, the initial investment will be recovered ?

Solution :-

As we know , formula for future investment value is :-

• final value = Present value * [ 1 + (Rate / 100)]^(Time period) .

Let us assume that, required time period is T years.

Putting all values we get,

→ 100000 = 10000 * [ 1 + (8/100)]^T

→ 10 = [ 1 + (2/25) ]^T

→ 10 = (27/25)^T

→ T = 29.91 ≈ 30 years.

Hence, After 30 years time, the initial investment will be recovered .