The correct answer is A. Rs 1,290.10.
The present value (PV) of a security is the amount of money that would need to be invested today in order to have the desired amount of money in the future, given a certain interest rate. The formula for calculating the PV of a security is:
PV = FV / (1 + r)^n
where:
- PV = present value
- FV = future value
- r = interest rate
- n = number of years
In this case, we are given that the security pays Rs 5,000 in 20 years with a 7% annual interest rate. Substituting these values into the formula, we get:
PV = 5000 / (1 + 0.07)^20 = 1290.10
Therefore, the PV of the security is Rs 1,290.10.
Option B is incorrect because it is the PV of a security that pays Rs 5,000 in 10 years with a 7% annual interest rate. Option C is incorrect because it is the PV of a security that pays Rs 5,000 in 15 years with a 7% annual interest rate. Option D is incorrect because it is the PV of a security that pays Rs 5,000 in 25 years with a 7% annual interest rate.