What is the approximate present value (in Rs lakh) of an income of Rs 2.1 lakh to be received after 2 years if the rate of interest is 5%?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 1.905.
Amount = P(1 + R/10)T
where P is principal, R is rate and T is time.
According to the given question,
2.1 = P(1 + 5/100)2
⇒ P = 2.1 × 20/21 × 20/21
⇒ P = 1.9047 ≈ 1.905