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Perpetuity, Sinking Funds & Bonds · Question 12 of 63

If the trust paid the first scholarship today and then every year after, how much would it need today?

Question 12

MediumOriginal 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.

If the trust paid the first scholarship today and then every year after, how much would it need today?

Options for question 12

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. Today's payment is made at once; the rest is an ordinary perpetuity.

  2. 15,000+2,50,000=2,65,00015{,}000 + 2{,}50{,}000 = 2{,}65{,}000 rupees.

Worth noting

₹2,35,000 subtracts the first payment; it must be added, since it is paid now.

Concept
A perpetuity paid in advance
Typical time
120 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.