Discussion
An asset draws ₹20,000 every year after all the deductions. What will be its capitalised value with a rate of interest of 10% per annum?
Answer: C
The capitalised value of an asset that yields a constant annual income is that income divided by the rate of interest:
\[ \begin{aligned} \text{Capitalised value} = \frac{20{,}000}{0.10} \\ &= 2{,}00{,}000 \end{aligned} \]So the capitalised value is Rs 2,00,000. The options Rs 2,10,000, Rs 2,00,500 and Rs 2,00,100 would arise if one added the income or a part of it to the value, which is not how a perpetual income is capitalised.
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