powerpoint on TIME VALUE

2. SHRADHA JADHAV.
24
MINOTHI PARIDA.
34
JANHAVI PATIL .
35

4. Obviously, 10,000 today.
You already recognize that there is TIME
VALUE TO MONEY!!
Which would you prefer -- 10,000
today or 10,000 in 5 years ?

5. 5

6. TYPES OF INTEREST
SIMPLE
INTEREST
COMPOUND
INTEREST

7. SIMPLE INTEREST EXAMPLE
Assume that you deposit Rs1,000 in
an account earning 7% simple
interest for 2 years. What is the
accumulated interest at the end of
the 2nd year?

8. SUM
Calculate the value and interest for
2 years of a deposit of Rs. 5000
made today if the interest rate per
annum is compounded yearly,
halfly, quarterly, monthly at 7%
COMPOUNDED INTEREST
FORMULA = P*(1+r)n
FORMULA :-

9. (SHORTCUT METHOD BY USING TABLE)
PRESENT VALUE = FUTURE VALUE * PRESENT
VALUE INTEREST FACTOR
FUTURE VALUE = PRESENT VALUE * FUTURE
VALUE INTEREST FACTOR

10. .
USING FUTURE VALUE
TABLE
Period 6% 7% 8%
1 1.060 1.070 1.080
2 1.124 1.145 1.166
3 1.191 1.225 1.260
4 1.262 1.311 1.360
5 1.338 1.403 1.469

11. USING PRESENT VALUE
TABLES
Period 6% 7% 8%
1 .943 .935 .926
2 .890 .873 .857
3 .840 .816 .794
4 .792 .763 .735
5 .747 .713 .681

12.  A finance company has introduced a scheme of investment of
Rs. 40000. The returns would be Rs. 8000, 9000, 10000, 11000
and 12000 in the next five years. The indicated rate of interest is
8 %. Compute the present value of the investment and advise
regarding the investment.
 Find the present value of the following cash if the discount
rate is 18%. YEAR NPAT
2002 5000
2003 4000
2004 5000
2005 7500
2006 2500
State whether the investment in machinery is worthwhile if the
amount of cash outflow is Rs. 15000. rate of depreciation is
20% SLM basis.

14. EXAMPLES :
•Find doubling period as per rule of 72
and 69 if p.a. interest is 12%?
• If you deposit Rs. 5000 today at 12% p.a.
rate of interest how many years
(approximately) will this amount grow to
Rs.160000 ? Work this problem using the
rule of 72

16. FUTURE VALUE OF ANNUITY
FORMULA : A* (1+r)n - 1
r
PRESENT VALUE OF ANNUITY
FORMULA : A * 1- (1+r)-n
r (1+r)

18. EFFECTIVE ANNUAL
INTEREST RATE

19. Find the effective rate of interest if
interested is 8% p.a. compounded
MONTHLY, QUARTERLY, HALF YEARLY.
FORMULA:-
1 + r n - 1
n

21. BIBLOGRAPHY
• GOOGLE
SEARCH
ENGINE.
• SECURITY
ANALYSIS
AND
PORTFOLIO
MANAGEMENT.