The present value of a perpetuity of ₹1200 payable at the beginning of each year, if money is worth 5% per annum is :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹25,200
The present value (PV) of a perpetuity,
$PV=\frac{A}{r}×(1+r)$
$=\frac{1200}{0.05}×(1+0.05)$
$=₹25,200$