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.