The present value of a sequence of payments of Rs. 3000 made at the end of every 6 months and continuing forever, if money is worth 9% per annum compounded semi-annually, is
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 66666.66
Payments that continue forever form a perpetuity. The payments are half-yearly, so the rate per period is
\( \displaystyle i=\frac{9\%}{2}=0.045 \)
\( \displaystyle \text{PV}=\frac{R}{i} \)
\( \displaystyle =\frac{3000}{0.045} \)
\( \displaystyle =66666.66\ldots \)
So the present value is about Rs. 66666.66.
CBSE Applied Mathematics (Class XII):
Perpetuity
