If money earned only 5% a year, how much would…

If money earned only 5% a year, how much would the scholarship trust need today?

Question 13

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 money earned only 5% a year, how much would the scholarship trust need today?

₹2,40,000Correct answerYour answer₹2,50,000Correct answerYour answer₹3,00,000Correct answerYour answer₹3,15,000Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Worth noting

₹2,40,000 moves the wrong way; the fund must grow when the rate falls.

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

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