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Commerce Exam  >  Commerce Tests  >  Applied Mathematics for Class 11  >  Test: Perpetuity - Commerce MCQ

Test: Perpetuity - Commerce MCQ


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15 Questions MCQ Test Applied Mathematics for Class 11 - Test: Perpetuity

Test: Perpetuity for Commerce 2024 is part of Applied Mathematics for Class 11 preparation. The Test: Perpetuity questions and answers have been prepared according to the Commerce exam syllabus.The Test: Perpetuity MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Perpetuity below.
Solutions of Test: Perpetuity questions in English are available as part of our Applied Mathematics for Class 11 for Commerce & Test: Perpetuity solutions in Hindi for Applied Mathematics for Class 11 course. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free. Attempt Test: Perpetuity | 15 questions in 15 minutes | Mock test for Commerce preparation | Free important questions MCQ to study Applied Mathematics for Class 11 for Commerce Exam | Download free PDF with solutions
Test: Perpetuity - Question 1
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If the present value of a perpetuity is Rs. 3000 and the annual cash flow is Rs. 150, what is the discount rate?

Detailed Solution for Test: Perpetuity - Question 1

We use the perpetuity formula PV = CF / r, where PV is the present value, CF is the cash flow, and r is the discount rate. Rearranging the formula, we get r = CF / PV. Substituting the given values, we get r = 150 / 3000 = 0.05, or 5%, expressed as a percentage.

Test: Perpetuity - Question 2
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A perpetuity pays Rs. 80 annually. If the discount rate is 4%, what is its present value?

Detailed Solution for Test: Perpetuity - Question 2

Using the perpetuity formula PV = CF / r, we substitute the given values: PV = 80 / 0.04 = Rs. 1600.

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Test: Perpetuity - Question 3
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What is the present value of a perpetuity with a cash flow of Rs. 200 per year and a discount rate of 8%?

Detailed Solution for Test: Perpetuity - Question 3

Again, using the perpetuity formula PV = CF / r, we substitute the given values: PV = 200 / 0.08 = Rs. 2500.

Test: Perpetuity - Question 4
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If the present value of a perpetuity is Rs. 4000 and the annual cash flow is Rs. 200, what is the discount rate?
Detailed Solution for Test: Perpetuity - Question 4

Rearranging the perpetuity formula to solve for the discount rate, we get r = CF / PV = 200 / 4000 = 0.05, or 5%, expressed as a percentage.

Test: Perpetuity - Question 5
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A perpetuity pays Rs 60 annually. If the discount rate is 6%, what is its present value
Detailed Solution for Test: Perpetuity - Question 5

Applying the perpetuity formula PV = CF / r, we substitute the given values: PV = 60 / 0.06 = Rs. 900

Test: Perpetuity - Question 6
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What is the present value of a perpetuity with a cash flow of Rs. 150 per year and a discount rate of 10%?
Detailed Solution for Test: Perpetuity - Question 6

Using the perpetuity formula PV = CF / r, we substitute the given values: PV = 150 / 0.10 = Rs. 1500

Test: Perpetuity - Question 7
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What is the present value of a perpetuity with a cash flow of Rs. 100 per year and a discount rate of 5%?
Detailed Solution for Test: Perpetuity - Question 7

Applying the perpetuity formula PV = CF / r, we substitute the given values: PV = 100 / 0.05 = Rs. 2000.

Test: Perpetuity - Question 8
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If the present value of a perpetuity is Rs. 5000 and the annual cash flow is Rs. 200, what is the discount rate?
Detailed Solution for Test: Perpetuity - Question 8

Rearranging the perpetuity formula to solve for the discount rate, we get r = CF / PV = 200 / 5000 = 0.04, or 4%, expressed as a percentage.

Test: Perpetuity - Question 9
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If the present value of a perpetuity is Rs. 2000 and the discount rate is 10%, what is the annual cash flow?
Detailed Solution for Test: Perpetuity - Question 9

Once again, rearranging the perpetuity formula to solve for the cash flow, we get CF = r * PV = 0.10 * 2000 = Rs. 200.

Test: Perpetuity - Question 10
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A perpetuity pays Rs. 50 annually. If the interest rate is 8%, what is its present value?
Detailed Solution for Test: Perpetuity - Question 10

Using the perpetuity formula PV = CF / r, we substitute the given values: PV = 50 / 0.08 = Rs. 625.

Test: Perpetuity - Question 11
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What is the present value of a perpetuity that pays Rs. 120 annually if the discount rate is 6%?
Detailed Solution for Test: Perpetuity - Question 11

Applying the perpetuity formula PV = CF / r, we substitute the given values: PV = 120 / 0.06 = Rs. 2000

Test: Perpetuity - Question 12
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If the present value of a perpetuity is Rs. 1000 and the annual cash flow is Rs. 40, what is the discount rate?
Detailed Solution for Test: Perpetuity - Question 12

Rearranging the perpetuity formula to solve for the discount rate, we get r = CF / PV = 40 / 1000 = 0.04, or 4%, expressed as a percentage.

Test: Perpetuity - Question 13
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What happens to the present value of a perpetuity when the discount rate increases?
Detailed Solution for Test: Perpetuity - Question 13

As the discount rate increases, the present value of a perpetuity decreases because the discount rate is inveRs.ely proportional to the present value.

Test: Perpetuity - Question 14
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Which of the following statements about perpetuities is true?
Detailed Solution for Test: Perpetuity - Question 14

Perpetuities have an infinite duration, which means they continue indefinitely, leading to an infinite future value.

Test: Perpetuity - Question 15
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What is a perpetuity?
Detailed Solution for Test: Perpetuity - Question 15

A perpetuity is an investment that pays a constant stream of cash flows indefinitely, with no specific end date. Therefore, it has an infinite duration.

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