(b) Let’s say you’ve invested money in a company a few years ago.

Senior leaders of the

company want to pay you back Tk.120, 000 in a year. What will be the present value of
Tk.120, 000 if the interest rate is 5%?
Answer: we know,

Cash Flow
Present Value (PV) =
(1+i) n

Here, Cash Flow (CF) = 120000

Interest rate (i) = 5% or 0.05
n=1

So,
120000
PV =
(1+0.05) 1

120000

1.05

= 114285

Present value of 120000 is 114285