Question

what is the present value of Re. 1 to be received after 2 years compounded annually at 10 %



(a) 0.73

(b) 0.83

(c) 0.93

(d) none

step by step explanation must...​

Answer 1

The Present value of Money is 0.83 Paise, therefore Option 'B' is correct.

Given:-

Future Value (fv) = Rs. 1

Time (t) = 2 years

Rate = 10%

To Find:-

Present value of the Money.

Solution:-

To find out the Present value of Money, you just have to follow these simple steps.

As,

Future Value (fv) = Rs. 1

Time (t) = 2 years

Rate = 10%

Present Value (pv) = ?

According to the formula, we have

$pv = (\frac{fv}{1 + i} ) \times {1}^{2}$

$pv = ({ \frac{1}{1 + 0.1} })^{2}$

$pv = \frac{1}{ {(1.1)}^{2} }$

$pv = \frac{1}{1.21}$

pv = 0.826

Hence, the Present value of Money is 0.83 Paise, therefore Option 'B' is correct.

#SPJ2

Answer 2

The given question we have to find

what is the present value of Re. 1 to be received after 2 years compounded annually at 10 %

The present value have to be calculated (p)

The future value is given as Rs. 1 = F

The time is given as 2 years = n

The rate of interest is given as 10% = r

The formula to find the value is

$f = p {(1 + r)}^{2}$

substitute the values in the above formula we get

$1 = p ({1 + 0.1})^{2} \\ 1 = p( {1.1})^{2} \\ 1 = p(1.21) \\ \frac{1}{1.21} = p \\ = 0.83$

The rate of interest is given in percentage on converting it into fraction divide it by 100.

Therefore, the present value for the rupee 1 is 0.83

The above value is the final answer

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