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Perpetuity, Sinking Funds & Bonds · Question 6 of 63

Another trust of ₹3,60,000, also earning 6%, pays a prize every year for ever.

Question 6

EasyOriginal question

A family sets up a trust to pay a scholarship of ₹15,000 at the end of every year, for ever. Money earns 6% a year.

Another trust of ₹3,60,000, also earning 6%, pays a prize every year for ever. How large is the prize?

Options for question 6

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. A perpetuity pays the interest and keeps the fund whole.

  2. 3,60,000×0.06=21,6003{,}60{,}000 \times 0.06 = 21{,}600 rupees a year.

Worth noting

₹60,00,000 divides by 0.06 when the fund is already known.

Concept
The payment a fund supports
Typical time
90 s
Your time
—
The rule this testsPerpetuity
Practise this chapter →

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

Practise this chapter →

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