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Question
Find the present value of ₹ 2,000 per annum for 14 years at the rate of interest of 10% per annum. If the payments are made at the end of each payment period. [(1.1)–14 = 0.2632]
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Solution
Here a = 2000, n = 14, and i = `10/100` = 0.1
P = `"a"/"i" [1 - 1/(1 + "i")^"n"]`
= `2000/0.1 [1 - 1/(1 + 0.1)^14]`
= `2000/0.1 [1 - (1.1)^(-14)]`
= 20000 [1 – 0.2632]
= 20000 × 0.73678
= ₹ 14,735.60
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