The present value of a perpetual income of Rs x at the end of each six months is Rs 60,000. Then the value of x if money is worth 8% compounded semi-annually; is :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs 2400
The formula for present value of perpetuity,
$PV=\frac{A}{r}$
$⇒60,000=\frac{x}{0.04}$ $(r=\frac{8\%}{2}=0.04)$
$⇒x=2,400$