Mohsin Nadeem 18L-0101 BBA-B

National University of Computer and Emerging Sciences, Lahore Campus

Course: Macroeconomics
Program: SPRING
BBA Semester: 2020
Total
Type: Assignment Marks: 40
Submission
Date: 27-03-2020. Weight -
Section: BBA (B) Page(s): 1
18L-
Name: Mohsin Nadeem Roll No: 0101
Instruction : Please submit your assignment on due date via email and Google
classroom too. Please write your name, roll number, class-section in
this very order, otherwise your assignment won't be considered.

Email ID: fatima.saif@nu.edu.pk

QUESTION:

Describe each concept with definition, explanation /components and application/mathematical

example.
1) Difference between Future value and present values.
2) How these concepts are effected by inflation?

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Mohsin Nadeem 18L-0101 BBA-B

Table of Contents
Introduction:...............................................................................................................................................2
Example.......................................................................................................................................................2
Present Value..........................................................................................................................................2
Future Value............................................................................................................................................2
Difference between the Present and Future values....................................................................................2
How these concepts are effected by inflation?...........................................................................................3

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Mohsin Nadeem 18L-0101 BBA-B

Introduction:
Business owners and other investors use the concept of monetary policy approximately every
day. Generally, both of the Present and Future Value concept is derived from the time value of
money and its monetary concept. In other words, we can say that it can be a simple idea that
whatever money we received today is having the worth more than the money to be received one
year from now or any other date in the future.

Basically, Present and Future Values are the terms which are used in the financial world to
calculate the future and the current worth of money.

Example
Present Value
Future Value

Difference between the Present and Future values

Involve both discounted as well as interest rate. Involved only interest rate.

It is the current value of future cash flow. It is the amount of money which will grow
over period of time with simple or compound
interest.

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Mohsin Nadeem 18L-0101 BBA-B

Investors take the decision whether to reject or Only future gain of total investment is shown
accept the proposal with the help of present by future value. Hence, decision making for
value method. the investment is less here.

It can be founded using, It can be founded using,

PV=CF/(1+r)n FV=PV or CF/(1+r)n

The Present Value PV has the concept of “what The Future Value FV has the concept of “If
amount we invest today to get the specific we invest some money today, what will be the
amount in future?” amount we get at the future date?”

How these concepts are effected by inflation?