A perpetuity pays ₹1,500 at the end of every quarter. Money earns 12% a year, compounded quarterly. What is its present value?

Explanation

1. 01

   Payments are quarterly, so use the quarterly rate: $i = \frac{12\%}{4} = 3\% = 0.03$.

2. 02

   $\frac{1{,}500}{0.03} = 50{,}000$ rupees.