PV Present Value Invest Rs.

1 Lakh FD @ 6%

FV Future Value 106000

Perpetuity

Annuity
Perpetuity
NPV Net Present Value Time 0
1
2
3
till infinity

SINGLE CASHFLO PV = FV / (1 + r) ^ T
PV = FV * df

INFINITE CASHFL Perpetuity

Growing Perpetui
st Rs. 1 Lakh FD @ 6% for 1 747258.1729

Rs. 10,00,000 after 5 years

6%
FV PV df PV
0 = TODAY
100000 94339.6226415 0.94339622642 94339.6226415 1 = 1 year hence
100000 88999.6440014 0.88999644001 88999.6440014
100000 83961.9283032 0.83961928303 83961.9283032

FV or CashFlow PV Perpetuity
0
FV / (1 + r) ^ T 1 100000 94339.6226415 94339.62264
df = 1/ (1+r)^T discount factor 2 100000 88999.6440014 183339.266641
3 100000 83961.9283032 267301.194945
PV = CashFlow / r 4 100000 79209.3663238 346510.561268
PV = FV/r 5 100000 74725.8172866 421236.378555
6 100000 70496.054044 491732.432599
PV=FV/(r-g) 7 100000 66505.7113622 558238.143961
8 100000 62741.2371342 620979.381095
9 100000 59189.846353 680169.227448
10 100000 55839.4776915 736008.70514
11 100000 52678.7525392 788687.457679
12 100000 49696.9363577 838384.394037
13 100000 46883.9022242 885268.296261
14 100000 44230.096438 929498.392699
15 100000 41726.5060736 971224.898773
16 100000 39364.6283713 1010589.52714
17 100000 37136.4418597 1047725.969
18 100000 35034.3791129 1082760.34812
19 100000 33051.3010499 1115811.64917
20 100000 31180.4726886 1146992.12186
21 100000 29415.5402723 1176407.66213
22 100000 27750.5096908 1204158.17182
23 100000 26179.7261234 1230337.89794
24 100000 24697.8548334 1255035.75277
25 100000 23299.8630504 1278335.61583
26 100000 21981.0028777 1300316.6187
27 100000 20736.7951677 1321053.41387
28 100000 19563.0143091 1340616.42818
29 100000 18455.6738765 1359072.10206
30 100000 17411.0130911 1376483.11515
31 100000 16425.4840482 1392908.5992
32 100000 15495.7396681 1408404.33886
33 100000 14618.6223284 1423022.96119
34 100000 13791.15314 1436814.11433
35 100000 13010.5218302 1449824.63616
36 100000 12274.0771983 1462098.71336
37 100000 11579.3181116 1473678.03147
38 100000 10923.8850109 1484601.91648
39 100000 10305.5518971 1494907.46838
40 100000 9722.21877085 1504629.68715
41 100000 9171.9045008 1513801.59165
42 100000 8652.7400951 1522454.33175
43 100000 8162.96235386 1530617.2941
44 100000 7700.907881 1538318.20198
45 100000 7265.00743491 1545583.20942
46 100000 6853.78059897 1552436.99002
47 100000 6465.83075375 1558902.82077
48 100000 6099.84033372 1565002.6611
49 100000 5754.56635257 1570757.22746
50 100000 5428.83618167 1576186.06364
51 100000 5121.54356761 1581307.6072
52 100000 4831.64487511 1586139.25208
53 100000 4558.15554255 1590697.40762
54 100000 4300.14673826 1594997.55436
55 100000 4056.7422059 1599054.29657
56 100000 3827.11528859 1602881.41186
57 100000 3610.48612131 1606491.89798
58 100000 3406.11898237 1609898.01696
59 100000 3213.31979469 1613111.33675
60 100000 3031.43376857 1616142.77052
61 100000 2859.8431779 1619002.6137
62 100000 2697.96526217 1621700.57896
63 100000 2545.25024733 1624245.82921
64 100000 2401.17947861 1626647.00869
65 100000 2265.26365907 1628912.27235
66 100000 2137.0411878 1631049.31354
67 100000 2016.07659226 1633065.39013
68 100000 1901.95904931 1634967.34918
69 100000 1794.30098991 1636761.65017
70 100000 1692.73678293 1638454.38695
71 100000 1596.92149333 1640051.30844
72 100000 1506.52971069 1641557.83815
73 100000 1421.25444405 1642979.0926
74 100000 1340.80607929 1644319.89868
75 100000 1264.91139556 1645584.81007
76 100000 1193.31263732 1646778.12271
77 100000 1125.76663898 1647903.88935
78 100000 1062.04399904 1648965.93335
79 100000 1001.92830098 1649967.86165
80 100000 945.215378283 1650913.07703
81 100000 891.712621022 1651804.78965
82 100000 841.238321718 1652646.02797
83 100000 793.621058225 1653439.64903
84 100000 748.699111533 1654188.34814
85 100000 706.31991654 1654894.66806
86 100000 666.339543906 1655561.0076
87 100000 628.622211232 1656189.62981
88 100000 593.039821917 1656782.66963
89 100000 559.471530111 1657342.14116
90 100000 527.803330293 1657869.94449
91 100000 497.927670088 1658367.87216
92 100000 469.743084988 1658837.61525
1666666.667 Growing 2500000 Annuity
0
100000 1
102000 2
104040 3
106120.8 4
108243.216 5
110408.08032 6
112616.241926 7
114868.566765 8
117165.9381 9
119509.256862 10
121899.441999
124337.430839
126824.179456
129360.663045
131947.876306
134586.833832
137278.570509
140024.141919
142824.624758
145681.117253
10 year annuity
1 Lakh
SAME
FV or CashFlow PV Annuity 736008.7051 736008.7051

100000 94339.6226415 94339.62264 Annuity PV = (C/r)*(1-1/(1+r)^T)

100000 88999.6440014 183339.266641
100000 83961.9283032 267301.194945 ANNUITY of 10 YEARS = Perpetuity - Perpetuity starting paymen
100000 79209.3663238 346510.561268 C/r - (C/r)(1/(1+r))^T
100000 74725.8172866 421236.378555
100000 70496.054044 491732.432599 Perpetuity first payment is one period from the time at which we a
100000 66505.7113622 558238.143961
100000 62741.2371342 620979.381095
100000 59189.846353 680169.227448
100000 55839.4776915 736008.70514
Perpetuity starting payments at year 11

from the time at which we are finding PV

 Ajmal
31 annual payment of $250000
1st payment deliverd today
Tax=28%
r=5.85%

Actual flow deducting tax is 180000

a) PV=180000+180000((1-(1/1.0585^30))/0.0585)
PV= 2697950.157

b) Now, 144000 annuity is deducting tax of 28%

PV=530000+144000((1-(1/1.0585^30))/0.0585)
PV= 2544360.13

Option a is better
$250000
oday

ax is 180000

-(1/1.0585^30))/0.0585)

is deducting tax of 28%

-(1/1.0585^30))/0.0585)
Sarang Today Annuities
Option-a 72%*250000 (180000/0.0585)*(1-1/1.0585^30)
180000 2517950.157 2697950

Option-b today (144000/0.0585)*(1-1/1.0585^30)

530000 2014360.126 2544360
T 30 360
Cash flow stock 850
Cash flow bond 350
Intrest 10% 0.00833333333
6% 0.005 PV
FV
FV Annuity Factor
Future value of 2260.487925 1921414.736 (C/r)*((1+r)^t-1)
Future value of 1004.515042 351580.2649
Total fund 2272995.001 You plan to save $260 per month
Total inv
Month
withdrawal years 25 300 PV
intrest rate 7% 0.00583333333 FV

Present Value 2272995.001

(C/r)*(1-(1/1+r^T))
PV Annuity Factor
Withdrawal per 141.4869034 16065.05582 INV 1st Jan
INV 1st Feb
INV 1st marc
INV 1st Ap
INV 1st May
INV 1 June
ENDING 1 July
 =(1/r)*(1-1/(1+r)^T)
=PV*(1+r)^T
=(1/r)*((1+r)^T-1)

plan to save $260 per month starting today for the next 35 years "just to start the month off right." You feel that you can earn an
420
419 0.0085
29966.47355
1048370.299

FV = $260(1 + .102/12)[(1 + .102/12)420 − 1) / (.102/12)] = $1,048,370.30

6 mths 1 payment today + annuity of 5 months

BANK RD
ou feel that you can earn an interest rate of 10.2 percent compounded monthly. How much will there be in the account 35 year
e be in the account 35 years from today?
Q58

Cost of Car 37000

Under Leasing
Paid Today 2400
Period 36
Rate of Interest 0.005
Annuity 580

PVAF 0.84
32.87101624

PV of Annuities 19,065 Q58

Paid Today 2,400
PV of Outflow 21,465 Cost of Car 37000

If Bought Today Under Leasing

Cost of Car 37000 Paid Today 2400
Monthly Installme 1,126 Period 36
Rate of Interest 0.005
FVAF 1.2 Annuity 580
39.34
PVAF 0.84
Future Value 44,297 44277.17942 32.87101624

Net Outflow -22,277 PV of Annuities 19,065

Paid Today 2,400
Discounting @ 6% 0.839619283 PV of Outflow 21,465

PV -18,704.35 If Bought Today

Cost of Car 37000
Hence should go for Buying Monthly Installme 1,126

FV 1.19 FVAF 1.2

39.34
25,543
Sale Value of Car 18,753.49 Future Value 44,277
Diff in Sale Value 3,288.20
Net Outflow -22,277

Discounting @ 6% 0.839619283

PV -18,704.35

Hence should go for Buying

FV 1.19

25,565
Sale Value of Car 18,711.80
Diff in Sale Value 3,288.20
Here the basic idea is to subtract the 2 different annuities

Ann1 689563.7402
Ann2 23468.77
666094.9702

88600.91213 PV (T=2)
77387.46802 PV(0)=PV(T=2)/(1+r)^2

first payment in 3rd year

last in 30th year
total = 28
PV formula will give PV as of 2nd year
 Payment per yea 750
r 0.08 1-5 years
0.22 6-15 yrs 6-20
duration 15 yrs
PV at T=5 PV at T=0
5393.152182 3670.488754 first payment at T=6

0.08
0 1 2 3 4
3670.489

750
1.352184479
0.11

QUESTION 30
loan amount 580000
rate pm 0.0045 5.034760199 0.1986191915 0.8013808085
EMI 3256.878593
96 payments
253429.429 REPAID AMOUNT PV OF UNPAID PAYMENTS
326570.571 OUTSTANDING 8 years payment done
502540.8729 BALOON PAYMENT 22 year payment remaining
502540.8729

Que 54 WHO ? Varun

Option a 18000 251795.0157 269795.0157 Suggested option a

Option b 530000 2014360.126 2544360.126

Que 58 WHO? Varun

Leasing PV
 2400 0.005 19065.18942 21465.18942

Purchasing PV
22000 1.196680525 18384.18821
Difference 18615.81179

15534.81058
18590.20528
payment at T=6

0.11 750
5 6 20
5393.152

PV FACTOR
178.0846241

F UNPAID PAYMENTS

ar payment remaining

WHO? Ankit
Leasing
Innitial Payment 2400
Monthly Payments 580
APR 6%
No of Months 36
Pv 21465.19

Purchasing
Innitial cost 37000
Present value of resale 18471.62
Net Present Value 18528.38 Better option

equating present value of both the options

Present Value of Resale 15534.81
Value after 3 Years 18502.20727 Break even resale price at year 3
4.784589 0.209004 0.790996 7.19087 5393.152
k even resale price at year 3
LEASE FV of EMI 22814.94 Maneesh by FV
FV of 1 time 2872.033 25686.97

Buy FV of 37000 44277.18

FV of incoming 22000 22277.18
Although expectation of selling car at that price ask for risk factor

LEASE FV of EMI 22814.94

FV of 1 time 2872.033 25686.97

Buy FV of 37000 44277.18 18590.21 L SP of car

FV of incoming 22000 22277.18
Although expectation of selling car at that price ask for risk factor
SAURABH
 0.005 rate
2400 downpayment
19065.18942 lease annuity
21465.18942 Total cost if leased

find emi
payment of emi
PV
PV as 37000
22000 resale value
18615.81179 Total cost if bou PV

15534.81058 PV of resale value

18590.20528 indifference or FV of resale value