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find out the present value of an investment which is expected to give a return of rs. 2,500 per annum indefinitely and the rate of interest is 12%p.a.

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Final answer:

To find the present value of an investment that is expected to give a return of Rs. 2,500 per annum indefinitely at an interest rate of 12% per annum, we can use the formula for present value of a perpetuity. The present value of the investment is Rs. 20,833.33.

Step-by-step explanation:

To find the present value of an investment that is expected to give a return of Rs. 2,500 per annum indefinitely at an interest rate of 12% per annum, we can use the formula for present value of a perpetuity.

The formula for present value of a perpetuity is:

Present Value = Cash Flow / Interest Rate

In this case, the cash flow is Rs. 2,500 per year and the interest rate is 12% per year. Substituting these values into the formula, we get:

Present Value = 2,500 / 0.12 = Rs. 20,833.33

Therefore, the present value of the investment is Rs. 20,833.33.

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