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At what rate of interest will the present value of a perpetuity of ₹600 payable at the end of each quarter be ₹40,000 ?

Solution

✅ Correct Option: 4

For a perpetuity, PV=RiPV=\frac{R}{i} with ii the rate per period. So 40,000=600i40{,}000=\frac{600}{i} gives i=0.015i=0.015 per quarter, which is 0.015×4=0.060.015\times4=0.06, i.e. 6% per annum.

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