What is the value of a perpetuity that pays Rs. 10,000 annually when the required rate of return is 8%?
Correct answer: B. Rs. 125,000
- A. Rs. 80,000
- B. Rs. 125,000
- C. Rs. 135,000
- D. Rs. 180,000
Explanation
The value of a perpetuity is calculated as annual cash flow divided by the required return. Thus, Rs. 10,000 divided by 0.08 equals Rs. 125,000.
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