Answer to Question #182053 in Macroeconomics for SYEDA ZAINAB

Question

A bearer bond worth Rs. 50,000 after six years. What will be the present value of the bond if interest is

added yearly at 12 percent.

Answer 1

$PV = \frac{FV}{(1+r)^n}$

PV = present value

FV = future value

r = interest r/100

n = number of periods

$PV = \frac{ 50000}{[1+\frac{12}{100}]^6}=25,331.56$

Present value = Rs 25,331.56