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Time Value of Money

This document discusses time value of money concepts and provides examples of calculating future and present values. It gives the amounts needed to deposit today to achieve certain future values at given discount rates, as well as the present values of cash flows discounting back at a stated rate. Examples include calculating future values over periods of 2, 5, 6, and 10 years at rates of 7%, 10%, 10%, and 12% respectively, as well as determining a present value after discounting multiple cash flows over 5 years at 10%.

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bando007
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46 views11 pages

Time Value of Money

This document discusses time value of money concepts and provides examples of calculating future and present values. It gives the amounts needed to deposit today to achieve certain future values at given discount rates, as well as the present values of cash flows discounting back at a stated rate. Examples include calculating future values over periods of 2, 5, 6, and 10 years at rates of 7%, 10%, 10%, and 12% respectively, as well as determining a present value after discounting multiple cash flows over 5 years at 10%.

Uploaded by

bando007
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Time Value of Money

• Assume that you need Rs.1,000 in 2 years.


Let’s examine the process to determine how
much you need to deposit today at a discount
rate of 7% compounded annually.
• Rs. 873.44
• A person wants to know how large of a
deposit to make so that the money will grow
to Rs.10,000 in 5 years at a discount rate of
10%.
• Rs.6,209.21
• What will a deposit of Rs.4,500 at 10%
compounded semiannually be worth if left in
the bank for six years?
• Rs.8081.353467
• What is the Present Value at a discount rate of
10% of the following cash flow:

Time Rs.
After 1 year 600
After 2 years 600
After 3 years 400
After 4 years 400
After 5 years 100
• Rs. 1677.15
• What will a deposit of Rs.4,500 at 12%
compounded monthly be worth at the end of
10 years?
• Rs.14851.7410

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