What is the present value of an annuity due paying Rs. 1,000 at the beginning of each year for 3 years at 10% interest?
Correct answer: C. Rs. 2,735.54
- A. Rs. 2,486.85
- B. Rs. 3,000.00
- C. Rs. 2,735.54
- D. Rs. 3,310.00
Explanation
The present value of an annuity due equals the present value of an ordinary annuity multiplied by 1.10. Therefore, its value is 2,486.85 × 1.10 = Rs. 2,735.54.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Financial Mathematics: Interest, Annuities and Discounting
Financial mathematics covers simple and compound interest, principal, rate, time, accumulated value and present value. It also includes annuities, regular payments, sinking funds, loan repayments and discounting, with a distinction between ordinary annuities and annuities due and between trade discount and mathematical discount.
Practise Financial Mathematics: Interest, Annuities and Discounting
30 free Financial Mathematics: Interest, Annuities and Discounting MCQs from Quantitative Methods, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Quantitative Methods questions like this
Quantitative Methods is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Financial Mathematics: Interest, Annuities and Discounting questions
By how much does compound interest exceed simple interest on Rs. 20,000 at 5% per annum for 3 years?
What is the amount after one year on Rs. 10,000 at a nominal rate of 8% per annum compounded quarterly?
What is the total amount of Rs. 8,000 invested at simple interest of 6% per annum for 2.5 years?
An annuity pays Rs. 1,000 at the end of each year for three years, with the first payment at the end of year 3. At 10% interest, what is its value today?
What equal annual deposit is required at the end of each year to accumulate Rs. 50,000 in 5 years at 8% interest?
A bill of Rs. 20,000 due after 6 months is discounted at a simple bank discount rate of 10% per annum. What is the discount amount?