Mathematics for FinanceMTP Nov 20Question 1511 of 512
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Find the present value of 10,000\displaystyle 10,000 to be required after 5\displaystyle 5 years, if the interest rate be 9\displaystyle 9 per cent compounded annually.

Options

A5500\displaystyle 5500
B6000\displaystyle 6000
C5600\displaystyle 5600
D6500\displaystyle 6500
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Correct Answer

✅ Option d — 6500\displaystyle 6500

All Options:

  • A5500\displaystyle 5500
  • B6000\displaystyle 6000
  • C5600\displaystyle 5600
  • D6500\displaystyle 6500

Detailed Solution & Explanation

The present value (PV\displaystyle PV) of a future sum compounded annually is: PV=FV(1+i)nPV = \frac{FV}{(1+i)^n} Given: * Future Value (FV\displaystyle FV) = 10,000\displaystyle 10,000 * Time (n\displaystyle n) = 5\displaystyle 5 years * Interest rate (i\displaystyle i) = 9%\displaystyle 9\% p.a. = 0.09\displaystyle 0.09 Substituting the values: PV=10,000(1.09)5=10,0001.538624≈6,499.31≈6,500PV = \frac{10,000}{(1.09)^5} = \frac{10,000}{1.538624} \approx 6,499.31 \approx 6,500 This matches Option D (6500\displaystyle 6500). Hence, **Option D** is the correct answer.

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