A bond's face value of ₹1,000 will be repaid in 2 years. Buyers require 6% a year. What is the present value of that repayment alone? (Take $\frac{1}{(1.06)^{2}} = 0.8900$ .)

₹890Correct answerYour answer₹943.40Correct answerYour answer₹1,000Correct answerYour answer₹1,123.60Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Worth noting

₹943.40 discounts only one year; ₹1,123.60 grows the sum for two years instead of discounting it.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

A bond's face value of ₹1,000 will be repaid in 2 years. Buyers require 6% a year. What is the present value of that repayment alone? (Take 1(1.06)2=0.8900\frac{1}{(1.06)^{2}} = 0.8900(1.06)21​=0.8900.)