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Commerce Exam  >  Commerce Tests  >  Test: Perpetuity - Commerce MCQ

Test: Perpetuity - Commerce MCQ


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15 Questions MCQ Test - Test: Perpetuity

Test: Perpetuity for Commerce 2024 is part of Commerce 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 course for Commerce & Test: Perpetuity solutions in Hindi for Commerce 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 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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Perpetuity MCQs with Answers

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