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Question
Find the present value of an annuity immediate.of ₹18,000. p.a. for 3 years at 9% p.a. compounded annually. [Given `(1.09)^-3 = 0.7722`]
Solution
Given C = ₹ 18,000, r = 9 % p.a., n = 3
`"i" = 9/100`
P = `"C"/"i"[1 - (1 + "i")^-"n"]`
P = `18000/0.09[1 - (1.09)^-3]`
P = 200000[1 - 0.7722]
P = `0.2278 xx 200000`
P = ₹ 45,560
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