Which of the following is the present values of a perpetuity of ₹5,250 at the beginning of each year, if money is worth 7% effective ?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹80,250
The present value of a perpetuity is,
$PV=\frac{A}{r}×(1+r)$
$=\frac{5250}{0.07}(1+0.07)=₹80,250$