Question

Find the present value of annuity immediate of ₹ 18000 p.a. for 3 years at 9% p.a. compounded annually. [(Given : `(1.09)^-3 = 0.7722`]

Answer 1

C = 18,000, n = 3 years, 

`i = r/100 = 9/100 = 0.09`

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

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

= `18000/0.09[1 - 0.7722]`

= `18000/0.09[0.2278]`

= ₹ 45560

∴  Present value of the given annuity is ₹ 45560.