What will be the present value of Rs.13,230 due two years hence, when the interest is compounded at the rate of 5% per annual?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Rs12000.
Amount = P(1 + R/100)T
Where P is principal, R is rate and T is time.
Let the present value be x.
According to the given question,
13230 = x(1 + 5/100)2
⇒ 13230 = x × 21/20 × 21/20
⇒ x = 13230 × 20/21 × 20/21
⇒ x = 12000