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What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.?
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What is the the present value of an annuity of Rs.3000 for 15 years at...
Understanding Present Value of an Annuity
To calculate the present value of an annuity, we can use the formula:
PV = Pmt × [(1 - (1 + r)^-n) / r]
Where:
- PV = Present Value
- Pmt = Payment per period
- r = Interest rate per period
- n = Total number of periods
In this case:
- Pmt = Rs. 3000
- r = 4.5% per annum (or 0.045)
- n = 15 years
Step-by-step Calculation
1. Convert the Interest Rate
- r = 4.5% = 0.045
2. Total Number of Payments
- n = 15
3. Calculate the Present Value
- Substitute values into the formula:
- PV = 3000 × [(1 - (1 + 0.045)^-15) / 0.045]
4. Simplify the Calculation
- Calculate (1 + r)^-n:
- (1 + 0.045)^-15 ≈ 0.472
- Substitute back into the formula:
- PV ≈ 3000 × [(1 - 0.472) / 0.045]
- PV ≈ 3000 × [0.528 / 0.045]
- PV ≈ 3000 × 11.7333
- PV ≈ Rs. 35,200
Final Result
The present value of an annuity of Rs. 3000 for 15 years at 4.5% compounded annually is approximately Rs. 35,200.
Easy Trick to Remember
- Always convert the interest rate to decimal.
- Break down the steps to avoid confusion.
- Use a calculator for complex calculations to ensure accuracy.
This approach will help you to easily find the present value of any annuity!
To calculate the present value of an annuity, we can use the formula:
PV = Pmt × [(1 - (1 + r)^-n) / r]
Where:
- PV = Present Value
- Pmt = Payment per period
- r = Interest rate per period
- n = Total number of periods
In this case:
- Pmt = Rs. 3000
- r = 4.5% per annum (or 0.045)
- n = 15 years
Step-by-step Calculation
1. Convert the Interest Rate
- r = 4.5% = 0.045
2. Total Number of Payments
- n = 15
3. Calculate the Present Value
- Substitute values into the formula:
- PV = 3000 × [(1 - (1 + 0.045)^-15) / 0.045]
4. Simplify the Calculation
- Calculate (1 + r)^-n:
- (1 + 0.045)^-15 ≈ 0.472
- Substitute back into the formula:
- PV ≈ 3000 × [(1 - 0.472) / 0.045]
- PV ≈ 3000 × [0.528 / 0.045]
- PV ≈ 3000 × 11.7333
- PV ≈ Rs. 35,200
Final Result
The present value of an annuity of Rs. 3000 for 15 years at 4.5% compounded annually is approximately Rs. 35,200.
Easy Trick to Remember
- Always convert the interest rate to decimal.
- Break down the steps to avoid confusion.
- Use a calculator for complex calculations to ensure accuracy.
This approach will help you to easily find the present value of any annuity!
Community Answer
What is the the present value of an annuity of Rs.3000 for 15 years at...
Use the formula PVAimm= P/i (1-(1/(1+i)^n))
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What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.?
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What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.? 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 What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.?.
What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.? 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 What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the the present value of an annuity of Rs.3000 for 15 years at 4.5% p.a c.i ? Please tell me easy trick.?.
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