Please explain the steps to this discounting process:
Present value of Rs1000 due in 10 years, discounted at 11%, compounded half yearly?
(Ans is 343)
How?
1 Replies
(Guest)
Please explain the steps to this discounting process:
Present value of Rs1000 due in 10 years, discounted at 11%, compounded half yearly?
(Ans is 343)
How?
No. of years = 10*2=20
intt rate=11/2= 5.5%
now the 1 re. value will be discounted at 5.5% for 20 years that will give rs. 0.3247
hence according to the formula
future value =present value(1+r/100)T
1000*1/(1.055) = present value
therefore present value = 1000 * 0.3427
=343 Rs ans
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