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Q. A sum of money was invested for 10 years at 7% p.a and is now worth $2000. What was the original value invested ?
I tried solving this by diving 2000 by (1.007)^10 which was 2000/0.508. However the answer is not correct. Please help ?
7% is 0.07 and not 0.007 !!!
So. you should have divided by 1.07^10 (or simply looked up the 10 years discount factor at 7% in the tables provided).
Have you watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Sir I tried solving their question
I went to the present annuity factor table and multiplied 2000 by 0.508 to get the figure
And my answer was $1016
is this answer correct?
Yes, it is correct 🙂