At 8% converted quarterly, the present value of perpetuity of ₹900 payable at the end of each quarter is :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹45,000
The present value of a perpetuity is,
$PV=\frac{A}{r}$
and,
Quarterly interest rate = $\frac{8\%}{4}=\frac{8}{4}=2\%$
$⇒PV=\frac{900}{0.02}=₹45,000$