The present value (in ₹) of a perpetuity of ₹3600 payable at the end of each quarter, if the interest rate is 9% per annum compounded quarterly is :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹1,60,000
The present value (PV) of a perpetuity,
$PV=\frac{Periodic\,payment(c)}{Periodic\,interest\,rate(r)}$
$=\frac{3600}{\frac{9\%}{4}}=\frac{3600}{0.0225}$
$= ₹1,60,000$