FV

PV 
(1  i) n
 PV Annuity/Annuity Due

The present value of Re 1 paid at the beginning of each year at 10% for 4 years is

₹ 3.49 annuity 1
intrest 10%
nper 4
The present value of Re 1 paid at the end of each year at 10% for 4 years is

₹ 3.17
If you require a 9 percent annual compounded quarterly return on your investments, you would prefer
$15,000 five years from today rather than an ordinary annuity of $1,000 per year for 15 years.

single cash flow annuity

rate 9% q compounding annuity 1000
fv 15000 r 2% r 9%
n 5n 20 n 15
pv ₹ 9,612.25 annuity ₹ 32,748.95
You have been offered a prize. Out of following which one will you prefer? Assume discount rate of 15% per
annum.
1) Rs 5,00,000 today
2) Rs 75,000 per year for next 10 years
3) Rs 10,00,000 at the end of 5th year

Solution
2) 3)
1 500000 a 75000 fv 100000
2 ₹ 376,407.65 r 15% r 15%
3 ₹ 49,717.67 n 10 n 5
Consider an amount consisting of 3 cash flows of Rs. 2000 each. Assume an interest rate of 4%.
What is the present value if cash flow occurs?
1) Today
2) One year from today

annuity 2000
int 4%
nper 3

1)today ₹ 5,772.19
2)one yeR ₹ 5,550.18
Suppose I want to be able to withdraw $5000 at the end of 5 years and withdraw $6000 at the end
of 6 years, leaving a zero balance in the account after the last withdrawal. If I can earn 5% on my
balances, how much I deposit today to satisfy my withdrawal needs?

SINGLE SU 5000 SINGLE SUM 6000

NPER 5 NPER 6
INT 5% INT 5%

pv ₹ 3,917.63 pv ₹ 4,477.29

amnt to be deposited today ₹ 8,394.92

 you will retire 30 years from now, and will require an income of $125,000 per year during retirement. It is assumed that you
need your retirement income for 35 years and expect to earn 6% per year, calculate the amount to be invested today.

annuity in retirement 125000.00

retirment income
years 35.00
rate 6%

pv@ 30 $1,812,280.80

fv $1,812,280.80
rate 6%
yrs 30
pv today ₹ 315,536.45
ent. It is assumed that you will
unt to be invested today.