It is expected to receive Rs. 5,000 annually for 3 years with each receipt occurring at the end of the year. With a discount rate of 10%, the present value of the annuity will be nearly

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UPSC ESE 2019 Paper 1
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  1. Rs. 12,435
  2. Rs. 9,945
  3. Rs. 4,975
  4. Rs. 2,487

Answer (Detailed Solution Below)

Option 1 : Rs. 12,435
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ST 1: UPSC ESE (IES) Civil - Building Materials
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20 Questions 40 Marks 24 Mins

Detailed Solution

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Explanation:

\(TPV = \sum \frac{A}{{{{\left( {1 + i} \right)}^n}}}\)

\(TPV = \frac{{5000}}{{\left( {1.1} \right)}} + \frac{{5000}}{{{{\left( {1.1} \right)}^2}}} + \frac{{5000}}{{{{\left( {1.1} \right)}^3}}}\)

TPV = 4545 + 4132 + 3757

TPV = 12435

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