At 6% converted quarterly, the present value of a perpetuity of Rs. 900 payable at the end of each quarter is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 60000
The present value of a perpetuity paid at the end of each period is the payment divided by the rate per period. Interest is converted quarterly, so the rate per quarter is used.
\( \displaystyle i = \frac{6\%}{4} = 1.5\% = 0.015 \)
\( \displaystyle PV = \frac{R}{i} = \frac{900}{0.015} \)
\(PV = 60000\)
So the present value is Rs. 60000.
CBSE Applied Mathematics (Class XII):
Perpetuity
