A perpetuity of ₹2,400 a year has a present value of ₹40,000. What yearly rate of interest is being used?

Explanation

1. 01

   $PV = \frac{R}{i}$, so $i = \frac{R}{PV} = \frac{2{,}400}{40{,}000}$.

2. 02

   $i = 0.06$, that is 6% a year.