Q.

The present value of a perpetuity of  ₹ 750 payable at the beginning of each year, if money is worth 5% p.a., is

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a

15750

b

15000

c

 ₹ 14250

d

none of these

answer is B.

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Detailed Solution

Perpetuity D= ₹ 750 

Money is worth e= 5% p.a

We know that,

PV of Perpetuity =Dr PV of Perpetuity =7505100 PV of Perpetuity =15000

So, the present value of a perpetuity of  ₹ 750 payable at the beginning of each year

=15000+750

=15750

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