If the cash equivalent of a perpetuity of Rs. 300 payable at the end of each quarter is Rs. 24,000, then the rate of interest per annum is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 5%
For a perpetuity, the cash equivalent is the payment divided by the rate per period.
\( \displaystyle 24{,}000=\frac{300}{i} \)
\( \displaystyle i=\frac{300}{24{,}000} \)
\( \displaystyle =0.0125 \)
This is the rate per quarter, 1.25%. The rate per annum is
\( \displaystyle 4\times1.25\%=5\% \)
CBSE Applied Mathematics (Class XII):
Perpetuity
