A trust will pay ₹10,000 a year for ever, the first payment today. At 5% a year, what is its present value?

Explanation

1. 01

   Today's payment is worth ₹10,000 as it stands; the rest is an ordinary perpetuity worth $\frac{10{,}000}{0.05} = 2{,}00{,}000$.

2. 02

   In all, $10{,}000 + 2{,}00{,}000 = 2{,}10{,}000$ rupees.