24.4. Future Value (FV) and Present Value (PV)

Try these first

1. 1.

   What is the formula for calculating Future Value?

   Hint

   Remember that PV stands for Present Value!

2. 2.

   If you have a sum of ₹5,000 now, what is its Future Value in 1 year at 5% interest?

   Hint

   Use the FV formula and substitute the given values!

3. 3.

   What is the future value of ₹10,000 at 5% interest after 3 years?

   • ₹11,576
   • ₹12,000
   • ₹11,750

   Hint

   Use the FV formula.

4. 4.

   True or False: Present Value increases with a higher interest rate.

   • True
   • False

   Hint

   Consider how interest affects the value over time.

5. 5.

   You have the option to receive ₹100,000 today or ₹130,000 in 5 years. If the interest rate is 8%, which option should you choose?

   Hint

   Use the PV formula to find the current worth of the future amount.

6. 6.

   If an investment of ₹50,000 will yield ₹70,000 in 3 years, what is the annual interest rate?

   Hint

   Set up the FV equation and solve for 'r'.