Q.A person wants to receive ₹8,000 at the end of every year for 3 years. Find the amount they must invest today at 8% per annum compound interest to achieve this. [Given $(1.08)^{-3} = 0.7938$]

This asks for the present value of an ordinary annuity with $P=8000$, $i=0.08$, $n=3$.

$V = 8000\left[\dfrac{1-0.7938}{0.08}\right] = 8000(2.5775) = 20{,}620$.

Step 1 — Identify the values. $P=8000$, $i=0.08$, $n=3$.

Step 2 — Apply the present value formula.

Step 3 — Substitute $(1.08)^{-3}=0.7938$.

Independent check (discount each payment separately). The payment at the end of year 1, discounted back 1 year: $8000(1.08)^{-1} = 8000/1.08 \approx 7407.4$. Year 2's payment, discounted back 2 years: $8000(1.08)^{-2} \approx 8000/1.1664 \approx 6858.7$. Year 3's payment, discounted back 3 years: $8000(0.7938) = 6350.4$. Total: $7407.4+6858.7+6350.4 \approx 20{,}616.5$ — matching the formula's $20{,}620$ closely (the small gap is rounding in the intermediate discount factors, not an error).

Confusing this present-value question with a future-value question (finding what ₹8,000-a-year would grow to rather than what must be invested now) is the most common misread — the phrase 'must invest today' is the signal that present value, not future value, is being asked for.