The rate per annum compounded semi-annually so that the present value of perpetuity of ₹4,000 payable at the beginning of each 6 month be ₹54,000 is :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 16%
The formula for present value annuity,
$PV=\frac{A}{i}(1+i)$
$⇒54,000=\frac{4,000}{i}(1+i)$
$⇒12.5i=1⇒i=0.08$
∴ Annual rate = $2×i=16\%$