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An annuity pays Rs.500 annually for 8 years with an interest rate of 6% compounded annually. What is the present value of the annuity?
- a)Rs.3000
- b)Rs.3500
- c)Rs.4000
- d)Rs.4500
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
An annuity pays Rs.500 annually for 8 years with an interest rate of 6...
Use the formula for the present value of an annuity: PV = PMT * ((1 - (1 + r)^-n)/r). PV = 500 * ((1 - (1 + 0.06)^-8)/0.06) ≈ 3500.
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An annuity pays Rs.500 annually for 8 years with an interest rate of 6% compounded annually. What is the present value of the annuity?a)Rs.3000b)Rs.3500c)Rs.4000d)Rs.4500Correct answer is option 'B'. Can you explain this answer?
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