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Question
Find the present value of annuity immediate of ₹ 18000 p.a. for 3 years at 9% p.a. compounded annually. [(Given : `(1.09)^-3 = 0.7722`]
Solution
C = 18,000, n = 3 years,
`i = r/100 = 9/100 = 0.09`
`P = C/i[1 - (1 + i)^-n]`
= `18000/0.09[1 - (1 + 0.09)^-3]`
= `18000/0.09[1 - 0.7722]`
= `18000/0.09[0.2278]`
= ₹ 45560
∴ Present value of the given annuity is ₹ 45560.
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