UPSC Exam > UPSC Questions > The present value of rs 10000 due in 2 years ...
Start Learning for Free
The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ?
Most Upvoted Answer
The present value of rs 10000 due in 2 years at 5% p.a compund interes...
Calculation of Present Value with Compound Interest:
- Given data:
- Principal amount (P) = Rs 10,000
- Time period (n) = 2 years
- Rate of interest (r) = 5%
- Interest compounded semi-annually
Formula for Compound Interest:
The formula to calculate the future value of an amount with compound interest is:
FV = P(1 + r/n)^(nt)
Where,
FV = Future Value
P = Principal amount
r = Rate of interest
n = Number of compounding periods per year
t = Time period in years
Calculation:
In this case, the interest is compounded semi-annually, so the number of compounding periods per year (n) = 2.
Using the formula:
FV = 10,000(1 + 0.05/2)^(2*2)
= 10,000(1 + 0.025)^4
= 10,000(1.025)^4
≈ Rs 11,038.41
Calculation of Present Value:
The present value (PV) is the current worth of a future sum of money or stream of cash flows given a specified rate of return. It can be calculated using the formula:
PV = FV / (1 + r/n)^(nt)
Substitute the values into the formula:
PV = 11,038.41 / (1 + 0.05/2)^(2*2)
= 11,038.41 / (1.025)^4
≈ Rs 10,000
Therefore, the present value of Rs 10,000 due in 2 years at 5% p.a compound interest when the interest is paid on a half-yearly basis is approximately Rs 10,000.
- Given data:
- Principal amount (P) = Rs 10,000
- Time period (n) = 2 years
- Rate of interest (r) = 5%
- Interest compounded semi-annually
Formula for Compound Interest:
The formula to calculate the future value of an amount with compound interest is:
FV = P(1 + r/n)^(nt)
Where,
FV = Future Value
P = Principal amount
r = Rate of interest
n = Number of compounding periods per year
t = Time period in years
Calculation:
In this case, the interest is compounded semi-annually, so the number of compounding periods per year (n) = 2.
Using the formula:
FV = 10,000(1 + 0.05/2)^(2*2)
= 10,000(1 + 0.025)^4
= 10,000(1.025)^4
≈ Rs 11,038.41
Calculation of Present Value:
The present value (PV) is the current worth of a future sum of money or stream of cash flows given a specified rate of return. It can be calculated using the formula:
PV = FV / (1 + r/n)^(nt)
Substitute the values into the formula:
PV = 11,038.41 / (1 + 0.05/2)^(2*2)
= 11,038.41 / (1.025)^4
≈ Rs 10,000
Therefore, the present value of Rs 10,000 due in 2 years at 5% p.a compound interest when the interest is paid on a half-yearly basis is approximately Rs 10,000.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Top Courses for UPSCView all
The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ?
Question Description
The present value of rs 10000 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 rs 10000 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 rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ?.
The present value of rs 10000 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 rs 10000 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 rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ?.
Solutions for The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ? defined & explained in the simplest way possible. Besides giving the explanation of
The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ?, a detailed solution for The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ? has been provided alongside types of The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ? theory, EduRev gives you an
ample number of questions to practice The present value of rs 10000 due in 2 years at 5% p.a compund interest when the interest is paid on half yearly basis is ? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup