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A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment?
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A person invested money in bank paying 6% compounded semi annually. If...
PV Calculation for Investment
Investment in a bank with a 6% interest rate compounded semi-annually will grow over time. The present value (PV) of the investment can be calculated using the formula for compound interest.
Given Data:
- Interest Rate: 6%
- Compounding Frequency: Semi-annually
- Time Period: 6 years
- Future Value (FV): ₹8,000
Formula for Compound Interest:
PV = FV / (1 + (r/n))^(nt)
where:
PV = Present Value
FV = Future Value
r = Interest Rate per period
n = Number of compounding periods per year
t = Total number of years
Calculation:
- r = 6% or 0.06
- n = 2 (compounded semi-annually)
- t = 6 years
- FV = ₹8,000
PV = ₹8,000 / (1 + (0.06/2))^(2*6)
PV = ₹8,000 / (1 + 0.03)^12
PV = ₹8,000 / (1.03)^12
PV = ₹8,000 / 1.425761
PV ≈ ₹5,614.30
Result:
The present value of the investment is approximately ₹5,614.30. This means that if the person invests this amount today, it will grow to ₹8,000 in 6 years with a 6% interest rate compounded semi-annually.
Investment in a bank with a 6% interest rate compounded semi-annually will grow over time. The present value (PV) of the investment can be calculated using the formula for compound interest.
Given Data:
- Interest Rate: 6%
- Compounding Frequency: Semi-annually
- Time Period: 6 years
- Future Value (FV): ₹8,000
Formula for Compound Interest:
PV = FV / (1 + (r/n))^(nt)
where:
PV = Present Value
FV = Future Value
r = Interest Rate per period
n = Number of compounding periods per year
t = Total number of years
Calculation:
- r = 6% or 0.06
- n = 2 (compounded semi-annually)
- t = 6 years
- FV = ₹8,000
PV = ₹8,000 / (1 + (0.06/2))^(2*6)
PV = ₹8,000 / (1 + 0.03)^12
PV = ₹8,000 / (1.03)^12
PV = ₹8,000 / 1.425761
PV ≈ ₹5,614.30
Result:
The present value of the investment is approximately ₹5,614.30. This means that if the person invests this amount today, it will grow to ₹8,000 in 6 years with a 6% interest rate compounded semi-annually.
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A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment?
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A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment?.
A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A person invested money in bank paying 6% compounded semi annually. If the person expects to receive ₹8,000 in 6 years, what is the present value of investment?.
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