What is the present value of Rs.10,000 received in 2 years, if the interest rate is 12% per year, compounded semi-annually?

Question

Question

This question was previously asked in

SSC CGL 2022 Tier-I Official Paper (Held On : 09 Dec 2022 Shift 2)

Answer 1

Given:

Amount received in 2 years = Rs. 10,000

interest rate = 12% per year

Time = 2 years

Formula used:

Amount = Principal [1 + (\(\frac{R}{100}\))]ⁿ

Calculation:

A = 10000

R = 6% (semi-annually)

n = 4 (semi-annually)

thus,

⇒ 10000 = P [1 + (\(\frac{6}{100}\))]⁴

⇒ 10000 = P [\(\frac{106}{100}\)]⁴

⇒ 10000 = P x (1.06)⁴

⇒ P = \(\frac{10000}{1.06^4}\)

⇒ 7,920.9426

⇒ P = Rs. 7,920.94

Hence, the correct answer is 'Rs. 7,920.94'.

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