The rate of interest at which the present value of a perpetuity of ₹2,000 payable at the end of each year will be ₹10,000 is :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 20%
The formula for present value annuity,
$PV=\frac{A}{r}$
$10,000=\frac{2,000}{r}$
$r=\frac{2,000}{10,000}=0.2=20\%$