The present value of ₹10000 due in 2 years at 5%p.a. compound interest...
Calculation of Present Value of Amount Due in 2 years at 5% p.a. Compound Interest with Annual Interest Payment:
Step 1: Calculate the future value of ₹10,000 at the end of 2 years with 5% p.a. compound interest with annual interest payment.
FV = P(1+r)^n
where,
P = ₹10,000
r = 5% p.a. = 0.05
n = 2 years
FV = 10,000(1+0.05)^2
FV = ₹11,025
The future value of ₹10,000 at the end of 2 years with 5% p.a. compound interest with annual interest payment is ₹11,025.
Step 2: Calculate the present value of ₹11,025 using the formula for present value.
PV = FV/(1+r)^n
where,
FV = ₹11,025
r = 5% p.a. = 0.05
n = 2 years
PV = 11,025/(1+0.05)^2
PV = ₹9,523.81
The present value of ₹10,000 due in 2 years at 5% p.a. compound interest with annual interest payment is ₹9,523.81.
Therefore, the present value of ₹10,000 due in 2 years at 5% p.a. compound interest with annual interest payment is ₹9,523.81.
The present value of ₹10000 due in 2 years at 5%p.a. compound interest...
P.v =?
An=10000
i=0.05
n=2
FORMULA
P.V.=An/(1+i)^n
=10000/(1+.05)^2
=10000/(1.05)^2
=10000/1.1025
=9070.29
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