A charity organization has a fund of Rs. 2,00,000 to provide annual grants to students. The grant amount each year is Rs.15,000. The fund earns an interest rate of r% per annum. If the interest earned is used entirely to provide the grants, then the annual interest rate r is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 7.5%
Only the interest is paid out, so the fund itself is never used up: this is a perpetuity. The yearly interest must equal the yearly grant:
\( \displaystyle 200000 \times \frac{r}{100} = 15000 \)
\( \displaystyle r = \frac{15000}{2000} = 7.5 \)
So the rate is 7.5% per annum.
CBSE Applied Mathematics (Class XII):
Perpetuity
