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The present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is?
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The present value of 10,000 due in 2 years at 5% p.a. compound interes...
Calculation of Present Value
To calculate the present value of the given amount, we need to use the formula for present value of a future sum:
PV = FV / (1 + r)^n
Where,
PV = Present Value
FV = Future Value
r = rate of interest
n = number of periods
Calculation of Interest Rate
The given interest rate is 5% p.a. compounded half-yearly. Therefore, the effective interest rate for half-year is:
r = (1 + 0.05/2)^2 - 1
r = 0.050625 or 5.0625%
Calculation of Number of Periods
The given amount is due in 2 years. Since the interest is paid half-yearly, the number of periods will be:
n = 2 x 2 = 4
Calculation of Future Value
The future value of the given amount will be:
FV = 10,000 x (1 + 0.050625)^4
FV = 11,306.82
Calculation of Present Value
Using the formula for present value, we get:
PV = 11,306.82 / (1 + 0.050625)^4
PV = 9,893.84
Therefore, the present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is 9,893.84.
To calculate the present value of the given amount, we need to use the formula for present value of a future sum:
PV = FV / (1 + r)^n
Where,
PV = Present Value
FV = Future Value
r = rate of interest
n = number of periods
Calculation of Interest Rate
The given interest rate is 5% p.a. compounded half-yearly. Therefore, the effective interest rate for half-year is:
r = (1 + 0.05/2)^2 - 1
r = 0.050625 or 5.0625%
Calculation of Number of Periods
The given amount is due in 2 years. Since the interest is paid half-yearly, the number of periods will be:
n = 2 x 2 = 4
Calculation of Future Value
The future value of the given amount will be:
FV = 10,000 x (1 + 0.050625)^4
FV = 11,306.82
Calculation of Present Value
Using the formula for present value, we get:
PV = 11,306.82 / (1 + 0.050625)^4
PV = 9,893.84
Therefore, the present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is 9,893.84.
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The present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is?
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The present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is? 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 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is? 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 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is?.
The present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is? 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 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is? 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 due in 2 years at 5% p.a. compound interest when the interest is paid on half-yearly basis is?.
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