Question

If the present value of rupees 444 to be paid at the end of one year is rupees 400,then the one year discount factor would be?
(a)0.1
(b)1.111
(c)0.11
(d)0.909

Answer 1

Given :- If the present value of rupees 444 to be paid at the end of one year is rupees 400,then the one year discount factor would be ?

(a)0.1

(b)1.111

(c)0.11

(d)0.909

Solution :-

given that,

• Present value = Rs.400 .
• Future value = Rs.444 .
• time = 1 year.

we know that, when r % discount is given ,

• Future value = Present value * (1 + r)^(time)

Let us assume that, discount factor is r % .

Than , Putting all values we get,

→ 444 = 400(1 + r)¹

→ (444/400) = 1 + r

→ 1.11 = 1 + r

→ r = 1.11 - 1

→ r = 0.11 . (Ans.) (Option C).

Hence, discount factor is 0.11 .

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Answer 2

Given :- If the present value of rupees 444 to be paid at the end of one year is rupees 400,then the one year discount factor would be ?

(a)0.1

(b)1.111

(c)0.11

(d)0.909

Solution :-

given that,

Present value = Rs.400 .

Future value = Rs.444 .

time = 1 year.

we know that, when r % discount is given ,

Future value = Present value * (1 + r)^(time)

Let us assume that, discount factor is r % .

Than , Putting all values we get,

→ 444 = 400(1 + r)¹

→ (444/400) = 1 + r

→ 1.11 = 1 + r

→ r = 1.11 - 1

→ r = 0.11 . (Ans.) (Option C).

Hence, discount factor is 0.11 .

Learn more :-

Sahil deposited an amount in a bank at a certain rate of interest which is compounded annually. When he

inquired from th...

https://brainly.in/question/26967119

If there is 45% increase in amount in 3 years at simple interest, what will be the compound interest of Rs.

12,000 at th...

https://brainly.in/question/26772982