Q.A philanthropist wishes to award a scholarship of ₹600 every year forever from a fund earning 8% per annum. How large must the fund (corpus) be?

By definition, an ordinary (immediate) annuity is one in which the equal payments or receipts occur at the end of each period; if they occurred at the beginning it would be an annuity due.

An annuity is a sequence of equal payments made at regular intervals. The classification depends on the timing of each payment within its period:

• Ordinary / immediate annuity — the payment is made at the end of each period (e.g. loan EMIs, most rent-type receipts recorded at period end).
• Annuity due — the payment is made at the beginning of each period. …

By definition, in an ordinary annuity each payment or receipt is made at the end of every period — option (b). (When payments are made at the beginning of each period it is called an annuity due.)

An annuity is a sequence of equal payments made at regular intervals of time. Annuities are classified by when within each period the payment occurs:

• Ordinary annuity (immediate annuity): each payment is made at the end of the period.
• Annuity due: each payment is made at the beginning of the period. …

A sequence of equal payments made at equal time intervals for a fixed (limited) number of periods is an annuity; only if it continued indefinitely would it be a perpetuity. Hence option (B).

Comparing the choices:

• Perpetuity — equal cash flows that continue for an unlimited (infinite) time, so it is ruled out by the word "limited period." …