A perpetuity of ₹1,000 a year will start with its first payment 3 years from now. At 10% a year, what is it worth today, to the nearest rupee? (Take $\frac{1}{(1.1)^{2}} = 0.8264$ .)

₹7,513Correct answerYour answer₹8,264Correct answerYour answer₹9,091Correct answerYour answer₹10,000Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

Two years from now it is an ordinary perpetuity, worth $\frac{1{,}000}{0.1} = 10{,}000$ at that time.
Discount it back 2 years: $10{,}000 \times 0.8264 = 8{,}264$ rupees.

Worth noting

₹7,513 discounts 3 years; the perpetuity formula already values the payments as of one year before the first.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

A perpetuity of ₹1,000 a year will start with its first payment 3 years from now. At 10% a year, what is it worth today, to the nearest rupee? (Take 1(1.1)2=0.8264\frac{1}{(1.1)^{2}} = 0.8264(1.1)21​=0.8264.)