If the present value of a perpetuity of ₹800 payable at the end of every six months be ₹20,000, then rate of interest is :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 8% per annum
The present value of a perpetuity,
$PV=\frac{A}{r}$
$20,000=\frac{800}{r}$
$r=\frac{800}{20,000}=4\%$
Annual Rate = $4\%×=8\%$