The present value of a sequence of payments of Rs. 2000 made at the end of every 6 months and continuing forever, if money is worth 8% per annum compounded semi-annually, is:

Rs 50000

The correct answer is Option (2) → Rs 50000

Payment each period = 2000

Interest = 8% per annum compounded semi-annually

Semi-annual rate:

$i = \frac{8\%}{2} = 4\% = 0.04$

This is a perpetuity (payments forever).

Present value of perpetuity:

$PV = \frac{\text{Payment}}{i}$

$= \frac{2000}{0.04}$

$= 50{,}000$

Present value = ₹50,000