Question

Find the present value of an annuity immediate.of ₹18,000. p.a. for 3 years at 9% p.a. compounded annually. [Given `(1.09)^-3 = 0.7722`]

Answer 1

 Given C = ₹ 18,000, r = 9 %  p.a., n = 3

`"i" = 9/100`

P = `"C"/"i"[1 - (1 + "i")^-"n"]`

P = `18000/0.09[1 - (1.09)^-3]`

P = 200000[1 - 0.7722]

P = `0.2278 xx 200000`

P = ₹ 45,560