A perpetuity pays ₹2,000 at the end of every half-year. Money earns 10% a year, compounded half-yearly. What is its present value?

Explanation

1. 01

   Payments are half-yearly, so use the half-yearly rate: $i = \frac{10\%}{2} = 0.05$.

2. 02

   $\frac{2{,}000}{0.05} = 40{,}000$ rupees.