A perpetual bond generates an annual return of Rs. 1,50,000 payable at the end of each year. The present value of this perpetuity if the money is worth 7 % per annum will be
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 21,42,857.14
The present value of a perpetuity of R payable at the end of each period, at rate i per period, is \( P=\frac{R}{i} \):
\( \displaystyle P=\frac{1{,}50{,}000}{0.07} \)
\( \displaystyle =21{,}42{,}857.14 \)
CBSE Applied Mathematics (Class XII):
Perpetuity
