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The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees?
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The present value of 10,000 in 2 years at the rate of 5% per annum com...
Calculation of Present Value
Given Data
- Principal amount (P) = 10,000
- Time period (n) = 2 years
- Rate of interest (R) = 5% per annum
- Interest compounded half-yearly
Calculation
We need to find the present value of the amount, which is the amount that needs to be invested today to get Rs. 10,000 after 2 years.
We can use the formula for calculating the present value of a lump sum:
Present Value (PV) = FV / (1+R/100)n
Where,
- PV = Present Value
- FV = Future Value
- R = Rate of interest
- n = Time period
Calculation of Interest
The interest is compounded half-yearly, so the effective rate of interest will be calculated as follows:
Effective rate of interest = (1 + R/2/100)2 - 1
Substituting the values of R = 5% and n = 2 years in the above formula, we get:
Effective rate of interest = (1 + 0.025)4 - 1 = 0.0506
Calculation of Present Value
Substituting the values of FV = 10,000, R = 5% and n = 2 years in the first formula, we get:
Present Value (PV) = 10,000 / (1+0.0506)2 = 8,619.82
Therefore, the present value of Rs. 10,000 after 2 years at the rate of 5% per annum compound interest when the interest is paid on half-yearly basis is Rs. 8,619.82.
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The present value of 10,000 in 2 years at the rate of 5% per annum com...
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The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees?
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The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees?.
The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of 10,000 in 2 years at the rate of 5% per annum compound interest when the interest is paid on half yearly basis is rupees?.
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