Find the present value of a perpetuity of Rs 900 payable at the end of each year, if money is worth 5% per annum .
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : ₹18000
Given $R=₹900$
$r= 5$% p.a
$∴i=\frac{5}{100}=0.05$
Present value $P=\frac{R}{i}$
$=\frac{900}{0.05}$
$= ₹18000$