PRC-2 · Chapter 4 · Question 36 of 60
An investment produces a perpetual stream of Rs. 50,000 every year forever. If the interest rate is 10%, what is the Present Value of this 'Perpetuity'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 500,000
Explanation
The Present Value of a perpetuity is calculated as (Annual Payment / Interest Rate). So, 50,000 / 0.10 = Rs. 500,000.
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