What sum of money is needed to invest now, so as to get Rs. 5000 at the beginning of every month forever, if the money is worth 6 % per annum compounded monthly?

Rs. 10,05,000

The correct answer is Option (1) → Rs. 10,05,000

Given:

Monthly payment: R = 5000

Rate of interest: 6% p.a. compounded monthly → i = 0.06 / 12 = 0.005 per month

For perpetuity (payments forever) at the beginning of every month (annuity due), present value:

$P = \frac{R}{i} (1 + i)$

Substitute values:

$P = \frac{5000}{0.005} (1 + 0.005) = 1,000,000 * 1.005 = 1,005,000$

Required sum of money = Rs. 1,005,000