Question

To find the present value of a sum of Rs. 10,000 to be received at the end of each year for the next 5 years at 10% rate, we use:​

Answer 1

To find the present value of sum of Rs.10000 you can use compound interest.

Formula for Compound Interest:

A=P(1+R/100)^n

Substituting Our Values:

A= 10000(1+ 10/100)^5

A= 10000(11/10*11/10*11/10*11/10*11/10)

A= 10000(161,051/100000)

A= Rs.16105.1

So at end of 5 years the money will turn for Rs.16105.1.

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Answer 2

Given :

P= Rs.10,000

n= 5 years

R= 10%

To find :

Amount after five years

Solution :

In order to find the amount matured after five years, we need to use the Compound Interest

We know, A = P(1+ R/ 100)^n

Therefore, A= 10000(1+10/100)^5

=10000((100+10)/100)^5

=10000(110/100)^5

=10000(11/10)^5

=10000×(161051/100000)

=16105.1

Hence, the amount after 5 years will be Rs.16105.1

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