CA Foundation P3 · Chapter 4 · Question 9 of 10
The present value of a perpetuity of ₹6,000 receivable at the end of every year, when money is worth 12% per annum, is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹50,000
Explanation
PV of a perpetuity = A/i = 6,000/0.12 = ₹50,000. ₹56,000 is the value of a perpetuity due (payment also at the start: 50,000 + 6,000), and ₹72,000 results from multiplying by 12 instead of dividing.
More Mathematics of Finance MCQs
- Q1The simple interest on ₹12,000 at 8% per annum for 2½ years is:
- Q2The compound interest on ₹20,000 for 1½ years at 10% per annum compounded half-yearly is:
- Q3The effective annual rate of interest corresponding to a nominal rate of 12% per annum compounded quarterly is (to two decimals):
- Q4The difference between compound interest and simple interest on ₹15,000 for 2 years at 6% per annum (compounded annually) is:
- Q5At what rate of simple interest per annum will a sum double itself in 8 years?