The amount of money needed to ensure for a prize of ₹5000 at the begining of each year indefinitely if money is worth 5% compounded annually is:

₹1,05,000

The correct answer is Option (4) → ₹1,05,000 **

The payment is ₹5000 at the beginning of each year forever.

This is a perpetuity due.

Present value of a perpetuity due:

$PV = \frac{R}{i}\,(1+i)$

Here:

$R = 5000$

$i = 0.05$

Compute:

$PV = \frac{5000}{0.05}\,(1.05)$

$PV = 100000 \times 1.05$

$PV = 105000$

Required amount = ₹105000