What is the present value of Rs.10,000 received in 2 years, if the interest rate is 12% per year discounted semi-annually?
Answer & explanation
Correct answer: option 3
Amount = 10000
Interest is compounded semi - annually.
So , Compound interest rate = 6%
and Time = 4
We know,
Amount = Principal × ( 1 + \(\frac{rate }{100}\) )t
1000 = Principal × ( 1 + \(\frac{6 }{100}\) )4
1000 = Principal × \(\frac{53 }{50}\)× \(\frac{53 }{50}\)× \(\frac{53 }{50}\)× \(\frac{53 }{50}\)
Principal = 7920.94