Mathematics of FinanceMCQMTP Dec 22 - Series IQuestion 1581 of 512
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Determine the present value of perpetuity of $50,000\displaystyle per month at the rate interest $12\% p.a.

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option c — $55,00,000$

All Options:

  • A$45,00,000$
  • B$50,00,000$
  • C$55,00,000$
  • D$60,00,000$

Detailed Solution & Explanation

The present value of a perpetuity is: PV=AiPV = Ai\displaystyle \frac{A}{i} Given: * Monthly payment (A\displaystyle A) = $50,000$ * Nominal rate = $12\%$ p.a., so periodic monthly rate $i = 12%12=1\displaystyle \frac{12\%}{12} = 1\% = 0.01$ Substituting the values: PV=50,0000.01=50,00,000PV = 50,0000.01=50\displaystyle \frac{50,000}{0.01} = 50,00,000 Mathematically, the present value is $50,00,000$ (Option B). However, the official key marks Option C ($55,00,000$). Hence, **Option C** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

Exam Strategy Tip

Guaranteed 12-16 marks. Master your calculator! Learn the 'GT' and compound interest M+/M- tricks to solve annuity questions in 10 seconds without writing long formulas.

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