Multiple choice

Find the present value of Rs. $2,000$ to be received at the end of $1\dfrac{1}{2}$ years at a $10\%$ nominal annual interest rate compounded quarterly.

  1. $1562.40$
  2. $2562.40$
  3. $3562.40$
  4. $4562.40$
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A Correct answer
AI explanation

To find the present value, we discount the future amount using the formula PV = A / (1 + R/100)^n. The nominal annual rate of 10 percent gives a quarterly rate of 2.5 percent, and 1.5 years contains 6 quarters. Dividing 2000 by (1.025)^6 gives 2000 divided by 1.159693, which equals approximately 1562.40 rupees.

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