Mathematics for FinancePYQ Sep 24Question 1480 of 512
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What is the present value of 1000\displaystyle 1000 to be received after two years compounded annually at 10%\displaystyle 10\% interest rate?

Options

A826\displaystyle 826
B800\displaystyle 800
C836\displaystyle 836
D835\displaystyle 835
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Correct Answer

✅ Option a — 826\displaystyle 826

All Options:

  • A826\displaystyle 826
  • B800\displaystyle 800
  • C836\displaystyle 836
  • D835\displaystyle 835

Detailed Solution & Explanation

The present value (PV\displaystyle PV) of a future sum FV\displaystyle FV compounded annually is: PV=FV(1+i)nPV = \frac{FV}{(1+i)^n} Given: * Future Value (FV\displaystyle FV) = 1,00,000\displaystyle 1,00,000 * Time (n\displaystyle n) = 2\displaystyle 2 years * Interest rate (i\displaystyle i) = 10%\displaystyle 10\% p.a. = 0.10\displaystyle 0.10 Substituting the values: PV=1,000(1.10)2=1,0001.21≈826.45PV = \frac{1,000}{(1.10)^2} = \frac{1,000}{1.21} \approx 826.45 Thus, the present value is approximately 826\displaystyle 826. Hence, **Option A** is the correct answer.

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