Match List – I with List – II.
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LIST I |
LIST II |
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A. The present value of an immediate perpetuity of ₹R payable at end of any year forever at rate of i per period is: |
I. $\frac{R}{i}[1+i]^{-m}$ |
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B. Present value of deferred perpetuity is |
II. $\frac{A i}{(1+i)^n-1}$ |
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C. Periodic payment R in a sinking fund is given by formula (for Amount A) |
III. $A(1+i)^{-n}$ |
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D. The present value of redemption price A of a bond is given by |
IV. $\frac{R}{i}$ |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A - IV, B - I, C - II, D - III
$\text{(A)}\; \text{Immediate perpetuity} \Rightarrow \frac{R}{i} \Rightarrow \text{(IV)}$
$\text{(B)}\; \text{Deferred perpetuity} \Rightarrow \frac{R}{i}(1+i)^{-m} \Rightarrow \text{(I)}$
$\text{(C)}\; \text{Sinking fund} \Rightarrow R=\frac{Ai}{(1+i)^n-1} \Rightarrow \text{(II)}$
$\text{(D)}\; \text{Present value of redemption price} \Rightarrow A(1+i)^{-n} \Rightarrow \text{(III)}$
A–IV,\; B–I,\; C–II,\; D–III