Home › CA Foundation › quantitativeaptitude › Mathematics of Finance › Present value of an annuity of Rs.1000 per year …
Present value of an annuity of Rs.1000 per year for 2 years at 10% per annum is
ARs.2000.00
BRs.1900.00
CRs.1800.00
DRs.1735.54
Answer & Solution
Correct answer: D. Rs.1735.54
1. PV of annuity = A * [(1 - (1 + r)^-n) / r].
2. (1.10)^-2 = 1/1.21 = 0.8264.
3. PV factor = (1 - 0.8264)/0.10 = 1.7355.
4. PV = 1000 * 1.7355 = 1735.54.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.15_
Related questions
The interest rate per period in CI when annual rate is 12% compounded quarterly isDoubling period under the Rule of 72 at 9% per annum approximately equalsIf a loan of Rs.50000 is to be repaid in 5 equal annual instalments at 10% per annum, eachSinking fund deposit at end of each year to accumulate Rs.10000 in 5 years at 8% per annumThe interest on Rs.2500 for 5 years at simple interest is Rs.500. The rate isThe amount payable after 2 years on Rs.4000 at 5% per annum compounded annually isRs.16000 grows at compound interest to Rs.20736 in 2 years. The rate per annum isEqual monthly instalments needed to repay Rs.10000 in 1 year at 12% per annum approximatel