What is the present value of an ordinary annuity paying Rs. 1,000 annually for 3 years at 10%?
Correct answer: A. Rs. 2,486.85
- A. Rs. 2,486.85
- B. Rs. 2,700.00
- C. Rs. 2,735.54
- D. Rs. 3,000.00
Explanation
The present value is 1,000[1 − (1.10)⁻³] ÷ 0.10, which is approximately Rs. 2,486.85. The payment timing matters because an ordinary annuity pays at each period's end.
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