The present value of a perpetual income of ₹1,200 payable at the end of every six months is ₹40,000, then the value of r is, if money is worth r% compounded semi-annually :

6

The correct answer is Option (1) → 6

The present value formula for a perpetuity,

$PV=\frac{A}{r}$

$⇒40,000=\frac{1,200}{r}$

$⇒r=\frac{1,200}{40,000}=0.03=3\%$

Since compounding is semi-annual,

$R=2×0.03=6\%$