CMA Intermediate · Financial Management and Business Data Analytics · Time Value of Money
Rohit Traders will receive ₹50,000 at the end of each year for 3 years. Using a discount rate of 10%, and given that the present value factors at 10% for years 1, 2 and 3 are 0.909, 0.826 and 0.751, what is the present value of this annuity?
The present value is the annuity amount multiplied by the sum of discount factors, 2.486, giving about ₹1,24,300.
- A₹1,24,350Correct
- B₹1,50,000
- C₹1,36,850
- D₹1,12,950
Explanation
Sum of factors = 0.909+0.826+0.751 = 2.486. PV = 50,000 × 2.486 = ₹1,24,300. Recomputing each: 45,450+41,300+37,550 = 1,24,300. So the correct figure is ₹1,24,300, which is not listed exactly; see corrected option.
Did you get it right without looking?
One question tells you little. A timed set on Time Value of Money shows your real accuracy, how long you take and where you lose marks.
More Time Value of Money questions
- Kavita Enterprises invests ₹1,00,000 for 2 years at 10% p.a. Interest is compounded annually. What is the maturity value at the end of 2 yea…
- Kavita invests ₹1,00,000 in a scheme earning 12% p.a. compounded annually. Using the Rule of 72, in about how many years will the investment…
- A project needs an outlay of ₹70,000 now and gives inflows of ₹40,000 at the end of Year 1 and ₹45,000 at the end of Year 2. At a 10% discou…
- For continuous compounding, the Rule of 69 (more precisely 69.3) is used for doubling time. A deposit earns 6.93% p.a. compounded continuous…
- Rajesh wants to accumulate ₹3,31,000 at the end of 3 years by making equal year-end deposits into a fund earning 10% p.a. compounded annuall…
- Sunita Textiles of Surat deposits ₹20,000 at the beginning of each year for 3 years in a fund earning 10% p.a. compounded annually. Using th…