The present value of a sequence of payments of ₹1,200 made at the end of every 6 months and continuing forever, if money is worth 6% per annum compounded semi-annually, is :

₹40,000

The correct answer is Option (2) → ₹40,000

Periodic Payment = Rs. 1,200

Interest Rate Per Annum = 6%

Since compounding is semi-annual,

$\frac{6\%}{2}=3\%=0.03$

$⇒PV=\frac{1200}{0.03}=Rs.40,000$