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The present value of annuity of 5000 per annum for 12 years at 4% p.a C.I annually is?
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The present value of annuity of 5000 per annum for 12 years at 4% p.a ...
Calculation of Present Value of Annuity
Formula:
Present value of annuity = (A x [1 - (1 + r/n)^-nt]) x (n/r)
Where,
A = Annuity amount = 5000
r = Rate of interest = 4%
n = Number of compounding periods per year = 1
t = Number of years = 12
Calculation:
Using the above formula, we get:
Present value of annuity = (5000 x [1 - (1 + 0.04/1)^-(1*12)]) x (1/0.04)
= (5000 x [1 - (1.04)^-12]) x 25
= (5000 x [1 - 0.481]) x 25
= 5000 x 0.519 x 25
= 64875
Explanation:
The present value of annuity is the current value of a set of future cash flows, discounted at a given interest rate. In this case, we are given an annuity of 5000 per annum for 12 years, and a compounding interest rate of 4% per annum. Using the formula for calculating the present value of annuity, we can find the present value of this annuity.
The formula takes into account the annuity amount, the rate of interest, the number of compounding periods per year, and the number of years for which the annuity will be paid. By plugging in the given values, we get the present value of the annuity as 64875.
This means that if we were to receive a sum of 64875 today, and invest it at a rate of 4% per annum, we would be able to generate the same total cash flows as the annuity of 5000 per annum for 12 years. This calculation is useful when evaluating investment opportunities or retirement planning, as it allows us to compare the value of different cash flows over time.
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The present value of annuity of 5000 per annum for 12 years at 4% p.a C.I annually is?
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The present value of annuity of 5000 per annum for 12 years at 4% p.a C.I annually 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 annuity of 5000 per annum for 12 years at 4% p.a C.I annually 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 annuity of 5000 per annum for 12 years at 4% p.a C.I annually is?.
The present value of annuity of 5000 per annum for 12 years at 4% p.a C.I annually 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 annuity of 5000 per annum for 12 years at 4% p.a C.I annually 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 annuity of 5000 per annum for 12 years at 4% p.a C.I annually is?.
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