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The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ?
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The present value of 10000rs due in 2 years at 5 % p.a. compund intere...
Calculating the Present Value with Compound Interest
In order to calculate the present value of 10000rs due in 2 years at 5% p.a. compound interest when the interest is paid on a half-yearly basis, we need to follow a step-by-step process.
Step 1: Calculate the half-yearly interest rate
- Since the annual interest rate is 5%, the half-yearly interest rate would be 2.5% (5% divided by 2).
Step 2: Determine the number of compounding periods
- With the interest being paid on a half-yearly basis, there will be 4 compounding periods over the 2-year period (2 years x 2 compounding periods per year).
Step 3: Calculate the present value using the compound interest formula
- The formula for calculating the present value with compound interest is: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate per period, and n is the number of periods.
- Plugging in the values, we get: PV = 10000 / (1 + 0.025)^4.
Step 4: Calculate the present value
- PV = 10000 / (1 + 0.025)^4
- PV = 10000 / (1.025)^4
- PV = 10000 / 1.1038125
- PV ≈ 9053.48rs
Therefore, the present value of 10000rs due in 2 years at 5% p.a. compound interest, with interest paid on a half-yearly basis, is approximately 9053.48rs.
In order to calculate the present value of 10000rs due in 2 years at 5% p.a. compound interest when the interest is paid on a half-yearly basis, we need to follow a step-by-step process.
Step 1: Calculate the half-yearly interest rate
- Since the annual interest rate is 5%, the half-yearly interest rate would be 2.5% (5% divided by 2).
Step 2: Determine the number of compounding periods
- With the interest being paid on a half-yearly basis, there will be 4 compounding periods over the 2-year period (2 years x 2 compounding periods per year).
Step 3: Calculate the present value using the compound interest formula
- The formula for calculating the present value with compound interest is: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate per period, and n is the number of periods.
- Plugging in the values, we get: PV = 10000 / (1 + 0.025)^4.
Step 4: Calculate the present value
- PV = 10000 / (1 + 0.025)^4
- PV = 10000 / (1.025)^4
- PV = 10000 / 1.1038125
- PV ≈ 9053.48rs
Therefore, the present value of 10000rs due in 2 years at 5% p.a. compound interest, with interest paid on a half-yearly basis, is approximately 9053.48rs.
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The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ?
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The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ?.
The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of 10000rs due in 2 years at 5 % p.a. compund interest when the interest is paid on half yearly basis is ?.
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