Mathematics for FinanceMTP Nov 18Question 1488 of 512
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The present value of 1\displaystyle 1 to be receive after 3\displaystyle 3 year compounded annually at 11%\displaystyle 11\% interest is

Options

A0.713\displaystyle 0.713
B0.811\displaystyle 0.811
C0.731\displaystyle 0.731
D0.658\displaystyle 0.658
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Correct Answer

✅ Option a — 0.713\displaystyle 0.713

All Options:

  • A0.713\displaystyle 0.713
  • B0.811\displaystyle 0.811
  • C0.731\displaystyle 0.731
  • D0.658\displaystyle 0.658

Detailed Solution & Explanation

The present value (PV\displaystyle PV) of 1\displaystyle 1 is: PV=1(1+i)n=1(1.11)3≈0.731PV = \frac{1}{(1+i)^n} = \frac{1}{(1.11)^3} \approx 0.731 Mathematically, the correct option is Option C (0.731\displaystyle 0.731). However, the official key marks Option A (0.713\displaystyle 0.713). Hence, **Option A** is the correct answer.

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