Q1 Vipul deposits Rs 1000 starting from the end of next year for a period of 5 years in to a Bank a/c

that returns 10% compounded annually.

What will be the amount that will be accumulated in the bank a/c at the end of 5 years?

10%
Year OB Deposit Interest CB
1 - 1,000.00 - 1,000.00
2 1,000.00 1,000.00 100.00 2,100.00
3 2,100.00 1,000.00 210.00 3,310.00
4 3,310.00 1,000.00 331.00 4,641.00
5 4,641.00 1,000.00 464.10 6,105.10

Using FV ₹ 6,105.10

Using Formula FVA =

Q2 What if the payments were made at the beginning of every year?

10%
Year OB Deposit Interest CB
1 - 1,000.00 100.00 1,100.00
2 1,100.00 1,000.00 210.00 2,310.00
3 2,310.00 1,000.00 331.00 3,641.00
4 3,641.00 1,000.00 464.10 5,105.10
5 5,105.10 1,000.00 610.51 6,715.61

Using FV ₹ 6,715.61

Using Formula FVA =

Q3 A corporate requires Rs 1000 Crores at the end of 7 years from now to redeem debentures. How much should they set asi
annually starting from end of next year in to a sinking fund that returns 8% annually?
 Using Formula 1000 = A

Hence A= 112.07

Using PMT A= ₹ -112.07

Q4 Mitashini has decided to pay Rs 20,000 every year as school fees starting from end of next year for a period of 5 years.
How much should she set aside NOW in to a Bank a/c so that the same can help her achieve her payment objectives?
Tarun Kehair:
Assume Bank a/c's return 6% compounded annually. achieved using Goal
Seek

6% 20,000.00
Year OB Deposit Interest Payments CB
1 - 84,247.28 5,054.84 20,000.00 69,302.11
2 69,302.11 - 4,158.13 20,000.00 53,460.24
3 53,460.24 - 3,207.61 20,000.00 36,667.85
4 36,667.85 - 2,200.07 20,000.00 18,867.92
5 18,867.92 - 1,132.08 20,000.00 -

Using PV ₹ 84,247.28

Using Formula PVA0 =

Q4 Damini wants to know the amount she should set aside now, to be able to finance her Post Graduate
Studies, requiring an annual payment of Rs 14,00,000 starting from end of next year, for 5 years.

How much should he set aside now, in a Bank a/c that fetches 8% annually, to be able to fund
his studies?

8% 1,400,000.00
Year OB Deposit Interest Payments CB
1 - 5,589,794.05 447,183.52 1,400,000.00 4,636,977.58
2 4,636,977.58 - 370,958.21 1,400,000.00 3,607,935.78
3 3,607,935.78 - 288,634.86 1,400,000.00 2,496,570.64
4 2,496,570.64 - 199,725.65 1,400,000.00 1,296,296.30
5 1,296,296.30 - 103,703.70 1,400,000.00 -

Using PV ₹ 5,589,794.05

Using Formula 5,589,794.05

 =FV(10%,5,-1000,0,0)

A X (1+r)^n - 1
r
1000 X 0.61051
10%

6,105.10

=FV(10%,5,-1000,0,1)

A X (1+r)^n - 1 X 1+r
r
1000 X 0.61051 X 110.0%
10%

6,715.61

How much should they set aside

 X 0.7138243
8%

year for a period of 5 years.

e her payment objectives?
n Kehair:
eved using Goal

A1 X 1-1/(1+r)^n
r

20000 X 4.212364

84247.275711
Q Vir has applied for a home loan of Rs 5,00,00,000 . The Bank has sanctioned the loan payable over 20 years
in equated monthly instalments.

The rate of interest is 9% compounded annually.

a) estimate the EMI

b) construct the LAS

Loan 50,000,000 t

Intrst 0.750%

EMI ₹ 449,862.98

Month OBL Interest EMI

1 ₹ 50,000,000.00 ₹ 375,000.00 ₹ 449,862.98
2 ₹ 49,925,137.02 ₹ 374,438.53 ₹ 449,862.98
3 ₹ 49,849,712.57 ₹ 373,872.84 ₹ 449,862.98
4 ₹ 49,773,722.44 ₹ 373,302.92 ₹ 449,862.98
5 ₹ 49,697,162.38 ₹ 372,728.72 ₹ 449,862.98
6 ₹ 49,620,028.12 ₹ 372,150.21 ₹ 449,862.98
7 ₹ 49,542,315.35 ₹ 371,567.37 ₹ 449,862.98
8 ₹ 49,464,019.74 ₹ 370,980.15 ₹ 449,862.98
9 ₹ 49,385,136.91 ₹ 370,388.53 ₹ 449,862.98
10 ₹ 49,305,662.46 ₹ 369,792.47 ₹ 449,862.98
11 ₹ 49,225,591.95 ₹ 369,191.94 ₹ 449,862.98
12 ₹ 49,144,920.91 ₹ 368,586.91 ₹ 449,862.98
13 ₹ 49,063,644.84 ₹ 367,977.34 ₹ 449,862.98
14 ₹ 48,981,759.20 ₹ 367,363.19 ₹ 449,862.98
15 ₹ 48,899,259.41 ₹ 366,744.45 ₹ 449,862.98
16 ₹ 48,816,140.88 ₹ 366,121.06 ₹ 449,862.98
17 ₹ 48,732,398.96 ₹ 365,492.99 ₹ 449,862.98
18 ₹ 48,648,028.97 ₹ 364,860.22 ₹ 449,862.98
19 ₹ 48,563,026.21 ₹ 364,222.70 ₹ 449,862.98
20 ₹ 48,477,385.93 ₹ 363,580.39 ₹ 449,862.98
21 ₹ 48,391,103.35 ₹ 362,933.28 ₹ 449,862.98
22 ₹ 48,304,173.65 ₹ 362,281.30 ₹ 449,862.98
23 ₹ 48,216,591.97 ₹ 361,624.44 ₹ 449,862.98
24 ₹ 48,128,353.43 ₹ 360,962.65 ₹ 449,862.98
25 ₹ 48,039,453.10 ₹ 360,295.90 ₹ 449,862.98
26 ₹ 47,949,886.03 ₹ 359,624.15 ₹ 449,862.98
27 ₹ 47,859,647.19 ₹ 358,947.35 ₹ 449,862.98
28 ₹ 47,768,731.57 ₹ 358,265.49 ₹ 449,862.98
29 ₹ 47,677,134.08 ₹ 357,578.51 ₹ 449,862.98
30 ₹ 47,584,849.60 ₹ 356,886.37 ₹ 449,862.98
31 ₹ 47,491,873.00 ₹ 356,189.05 ₹ 449,862.98
32 ₹ 47,398,199.07 ₹ 355,486.49 ₹ 449,862.98
33 ₹ 47,303,822.58 ₹ 354,778.67 ₹ 449,862.98
34 ₹ 47,208,738.27 ₹ 354,065.54 ₹ 449,862.98
35 ₹ 47,112,940.83 ₹ 353,347.06 ₹ 449,862.98
36 ₹ 47,016,424.91 ₹ 352,623.19 ₹ 449,862.98
37 ₹ 46,919,185.12 ₹ 351,893.89 ₹ 449,862.98
38 ₹ 46,821,216.03 ₹ 351,159.12 ₹ 449,862.98
39 ₹ 46,722,512.17 ₹ 350,418.84 ₹ 449,862.98
40 ₹ 46,623,068.04 ₹ 349,673.01 ₹ 449,862.98
41 ₹ 46,522,878.07 ₹ 348,921.59 ₹ 449,862.98
42 ₹ 46,421,936.68 ₹ 348,164.53 ₹ 449,862.98
43 ₹ 46,320,238.22 ₹ 347,401.79 ₹ 449,862.98
44 ₹ 46,217,777.03 ₹ 346,633.33 ₹ 449,862.98
45 ₹ 46,114,547.38 ₹ 345,859.11 ₹ 449,862.98
46 ₹ 46,010,543.51 ₹ 345,079.08 ₹ 449,862.98
47 ₹ 45,905,759.61 ₹ 344,293.20 ₹ 449,862.98
48 ₹ 45,800,189.83 ₹ 343,501.42 ₹ 449,862.98
49 ₹ 45,693,828.27 ₹ 342,703.71 ₹ 449,862.98
50 ₹ 45,586,669.01 ₹ 341,900.02 ₹ 449,862.98
51 ₹ 45,478,706.05 ₹ 341,090.30 ₹ 449,862.98
52 ₹ 45,369,933.37 ₹ 340,274.50 ₹ 449,862.98
53 ₹ 45,260,344.89 ₹ 339,452.59 ₹ 449,862.98
54 ₹ 45,149,934.50 ₹ 338,624.51 ₹ 449,862.98
55 ₹ 45,038,696.03 ₹ 337,790.22 ₹ 449,862.98
56 ₹ 44,926,623.27 ₹ 336,949.67 ₹ 449,862.98
57 ₹ 44,813,709.97 ₹ 336,102.82 ₹ 449,862.98
58 ₹ 44,699,949.81 ₹ 335,249.62 ₹ 449,862.98
59 ₹ 44,585,336.46 ₹ 334,390.02 ₹ 449,862.98
60 ₹ 44,469,863.50 ₹ 333,523.98 ₹ 449,862.98
61 ₹ 44,353,524.50 ₹ 332,651.43 ₹ 449,862.98
62 ₹ 44,236,312.96 ₹ 331,772.35 ₹ 449,862.98
63 ₹ 44,118,222.33 ₹ 330,886.67 ₹ 449,862.98
64 ₹ 43,999,246.02 ₹ 329,994.35 ₹ 449,862.98
65 ₹ 43,879,377.38 ₹ 329,095.33 ₹ 449,862.98
66 ₹ 43,758,609.74 ₹ 328,189.57 ₹ 449,862.98
67 ₹ 43,636,936.33 ₹ 327,277.02 ₹ 449,862.98
68 ₹ 43,514,350.38 ₹ 326,357.63 ₹ 449,862.98
69 ₹ 43,390,845.03 ₹ 325,431.34 ₹ 449,862.98
70 ₹ 43,266,413.39 ₹ 324,498.10 ₹ 449,862.98
71 ₹ 43,141,048.51 ₹ 323,557.86 ₹ 449,862.98
72 ₹ 43,014,743.39 ₹ 322,610.58 ₹ 449,862.98
 73 ₹ 42,887,490.99 ₹ 321,656.18 ₹ 449,862.98
74 ₹ 42,759,284.20 ₹ 320,694.63 ₹ 449,862.98
75 ₹ 42,630,115.85 ₹ 319,725.87 ₹ 449,862.98
76 ₹ 42,499,978.74 ₹ 318,749.84 ₹ 449,862.98
77 ₹ 42,368,865.60 ₹ 317,766.49 ₹ 449,862.98
78 ₹ 42,236,769.12 ₹ 316,775.77 ₹ 449,862.98
79 ₹ 42,103,681.91 ₹ 315,777.61 ₹ 449,862.98
80 ₹ 41,969,596.54 ₹ 314,771.97 ₹ 449,862.98
81 ₹ 41,834,505.54 ₹ 313,758.79 ₹ 449,862.98
82 ₹ 41,698,401.35 ₹ 312,738.01 ₹ 449,862.98
83 ₹ 41,561,276.39 ₹ 311,709.57 ₹ 449,862.98
84 ₹ 41,423,122.98 ₹ 310,673.42 ₹ 449,862.98
85 ₹ 41,283,933.43 ₹ 309,629.50 ₹ 449,862.98
86 ₹ 41,143,699.95 ₹ 308,577.75 ₹ 449,862.98
87 ₹ 41,002,414.72 ₹ 307,518.11 ₹ 449,862.98
88 ₹ 40,860,069.85 ₹ 306,450.52 ₹ 449,862.98
89 ₹ 40,716,657.40 ₹ 305,374.93 ₹ 449,862.98
90 ₹ 40,572,169.35 ₹ 304,291.27 ₹ 449,862.98
91 ₹ 40,426,597.64 ₹ 303,199.48 ₹ 449,862.98
92 ₹ 40,279,934.15 ₹ 302,099.51 ₹ 449,862.98
93 ₹ 40,132,170.68 ₹ 300,991.28 ₹ 449,862.98
94 ₹ 39,983,298.98 ₹ 299,874.74 ₹ 449,862.98
95 ₹ 39,833,310.74 ₹ 298,749.83 ₹ 449,862.98
96 ₹ 39,682,197.60 ₹ 297,616.48 ₹ 449,862.98
97 ₹ 39,529,951.10 ₹ 296,474.63 ₹ 449,862.98
98 ₹ 39,376,562.75 ₹ 295,324.22 ₹ 449,862.98
99 ₹ 39,222,024.00 ₹ 294,165.18 ₹ 449,862.98
100 ₹ 39,066,326.20 ₹ 292,997.45 ₹ 449,862.98
101 ₹ 38,909,460.67 ₹ 291,820.96 ₹ 449,862.98
102 ₹ 38,751,418.65 ₹ 290,635.64 ₹ 449,862.98
103 ₹ 38,592,191.31 ₹ 289,441.43 ₹ 449,862.98
104 ₹ 38,431,769.76 ₹ 288,238.27 ₹ 449,862.98
105 ₹ 38,270,145.06 ₹ 287,026.09 ₹ 449,862.98
106 ₹ 38,107,308.17 ₹ 285,804.81 ₹ 449,862.98
107 ₹ 37,943,250.00 ₹ 284,574.38 ₹ 449,862.98
108 ₹ 37,777,961.40 ₹ 283,334.71 ₹ 449,862.98
109 ₹ 37,611,433.13 ₹ 282,085.75 ₹ 449,862.98
110 ₹ 37,443,655.90 ₹ 280,827.42 ₹ 449,862.98
111 ₹ 37,274,620.34 ₹ 279,559.65 ₹ 449,862.98
112 ₹ 37,104,317.02 ₹ 278,282.38 ₹ 449,862.98
113 ₹ 36,932,736.42 ₹ 276,995.52 ₹ 449,862.98
114 ₹ 36,759,868.96 ₹ 275,699.02 ₹ 449,862.98
115 ₹ 36,585,705.00 ₹ 274,392.79 ₹ 449,862.98
116 ₹ 36,410,234.81 ₹ 273,076.76 ₹ 449,862.98
117 ₹ 36,233,448.60 ₹ 271,750.86 ₹ 449,862.98
118 ₹ 36,055,336.48 ₹ 270,415.02 ₹ 449,862.98
119 ₹ 35,875,888.53 ₹ 269,069.16 ₹ 449,862.98
120 ₹ 35,695,094.71 ₹ 267,713.21 ₹ 449,862.98
121 ₹ 35,512,944.95 ₹ 266,347.09 ₹ 449,862.98
122 ₹ 35,329,429.06 ₹ 264,970.72 ₹ 449,862.98
123 ₹ 35,144,536.80 ₹ 263,584.03 ₹ 449,862.98
124 ₹ 34,958,257.84 ₹ 262,186.93 ₹ 449,862.98
125 ₹ 34,770,581.80 ₹ 260,779.36 ₹ 449,862.98
126 ₹ 34,581,498.19 ₹ 259,361.24 ₹ 449,862.98
127 ₹ 34,390,996.44 ₹ 257,932.47 ₹ 449,862.98
128 ₹ 34,199,065.94 ₹ 256,492.99 ₹ 449,862.98
129 ₹ 34,005,695.96 ₹ 255,042.72 ₹ 449,862.98
130 ₹ 33,810,875.70 ₹ 253,581.57 ₹ 449,862.98
131 ₹ 33,614,594.29 ₹ 252,109.46 ₹ 449,862.98
132 ₹ 33,416,840.77 ₹ 250,626.31 ₹ 449,862.98
133 ₹ 33,217,604.09 ₹ 249,132.03 ₹ 449,862.98
134 ₹ 33,016,873.15 ₹ 247,626.55 ₹ 449,862.98
135 ₹ 32,814,636.72 ₹ 246,109.78 ₹ 449,862.98
136 ₹ 32,610,883.52 ₹ 244,581.63 ₹ 449,862.98
137 ₹ 32,405,602.16 ₹ 243,042.02 ₹ 449,862.98
138 ₹ 32,198,781.20 ₹ 241,490.86 ₹ 449,862.98
139 ₹ 31,990,409.08 ₹ 239,928.07 ₹ 449,862.98
140 ₹ 31,780,474.17 ₹ 238,353.56 ₹ 449,862.98
141 ₹ 31,568,964.75 ₹ 236,767.24 ₹ 449,862.98
142 ₹ 31,355,869.01 ₹ 235,169.02 ₹ 449,862.98
143 ₹ 31,141,175.05 ₹ 233,558.81 ₹ 449,862.98
144 ₹ 30,924,870.88 ₹ 231,936.53 ₹ 449,862.98
145 ₹ 30,706,944.44 ₹ 230,302.08 ₹ 449,862.98
146 ₹ 30,487,383.54 ₹ 228,655.38 ₹ 449,862.98
147 ₹ 30,266,175.94 ₹ 226,996.32 ₹ 449,862.98
148 ₹ 30,043,309.28 ₹ 225,324.82 ₹ 449,862.98
149 ₹ 29,818,771.12 ₹ 223,640.78 ₹ 449,862.98
150 ₹ 29,592,548.93 ₹ 221,944.12 ₹ 449,862.98
151 ₹ 29,364,630.07 ₹ 220,234.73 ₹ 449,862.98
152 ₹ 29,135,001.82 ₹ 218,512.51 ₹ 449,862.98
153 ₹ 28,903,651.35 ₹ 216,777.39 ₹ 449,862.98
154 ₹ 28,670,565.76 ₹ 215,029.24 ₹ 449,862.98
155 ₹ 28,435,732.03 ₹ 213,267.99 ₹ 449,862.98
156 ₹ 28,199,137.04 ₹ 211,493.53 ₹ 449,862.98
157 ₹ 27,960,767.59 ₹ 209,705.76 ₹ 449,862.98
158 ₹ 27,720,610.37 ₹ 207,904.58 ₹ 449,862.98
159 ₹ 27,478,651.97 ₹ 206,089.89 ₹ 449,862.98
160 ₹ 27,234,878.88 ₹ 204,261.59 ₹ 449,862.98
161 ₹ 26,989,277.49 ₹ 202,419.58 ₹ 449,862.98
162 ₹ 26,741,834.09 ₹ 200,563.76 ₹ 449,862.98
163 ₹ 26,492,534.87 ₹ 198,694.01 ₹ 449,862.98
164 ₹ 26,241,365.91 ₹ 196,810.24 ₹ 449,862.98
165 ₹ 25,988,313.17 ₹ 194,912.35 ₹ 449,862.98
166 ₹ 25,733,362.54 ₹ 193,000.22 ₹ 449,862.98
167 ₹ 25,476,499.78 ₹ 191,073.75 ₹ 449,862.98
168 ₹ 25,217,710.56 ₹ 189,132.83 ₹ 449,862.98
169 ₹ 24,956,980.41 ₹ 187,177.35 ₹ 449,862.98
170 ₹ 24,694,294.78 ₹ 185,207.21 ₹ 449,862.98
171 ₹ 24,429,639.01 ₹ 183,222.29 ₹ 449,862.98
172 ₹ 24,162,998.33 ₹ 181,222.49 ₹ 449,862.98
173 ₹ 23,894,357.84 ₹ 179,207.68 ₹ 449,862.98
174 ₹ 23,623,702.54 ₹ 177,177.77 ₹ 449,862.98
175 ₹ 23,351,017.34 ₹ 175,132.63 ₹ 449,862.98
176 ₹ 23,076,286.99 ₹ 173,072.15 ₹ 449,862.98
177 ₹ 22,799,496.16 ₹ 170,996.22 ₹ 449,862.98
178 ₹ 22,520,629.41 ₹ 168,904.72 ₹ 449,862.98
179 ₹ 22,239,671.15 ₹ 166,797.53 ₹ 449,862.98
180 ₹ 21,956,605.70 ₹ 164,674.54 ₹ 449,862.98
181 ₹ 21,671,417.27 ₹ 162,535.63 ₹ 449,862.98
182 ₹ 21,384,089.92 ₹ 160,380.67 ₹ 449,862.98
183 ₹ 21,094,607.62 ₹ 158,209.56 ₹ 449,862.98
184 ₹ 20,802,954.20 ₹ 156,022.16 ₹ 449,862.98
185 ₹ 20,509,113.37 ₹ 153,818.35 ₹ 449,862.98
186 ₹ 20,213,068.75 ₹ 151,598.02 ₹ 449,862.98
187 ₹ 19,914,803.78 ₹ 149,361.03 ₹ 449,862.98
188 ₹ 19,614,301.84 ₹ 147,107.26 ₹ 449,862.98
189 ₹ 19,311,546.12 ₹ 144,836.60 ₹ 449,862.98
190 ₹ 19,006,519.74 ₹ 142,548.90 ₹ 449,862.98
191 ₹ 18,699,205.66 ₹ 140,244.04 ₹ 449,862.98
192 ₹ 18,389,586.72 ₹ 137,921.90 ₹ 449,862.98
193 ₹ 18,077,645.65 ₹ 135,582.34 ₹ 449,862.98
194 ₹ 17,763,365.01 ₹ 133,225.24 ₹ 449,862.98
195 ₹ 17,446,727.27 ₹ 130,850.45 ₹ 449,862.98
196 ₹ 17,127,714.75 ₹ 128,457.86 ₹ 449,862.98
197 ₹ 16,806,309.63 ₹ 126,047.32 ₹ 449,862.98
198 ₹ 16,482,493.97 ₹ 123,618.70 ₹ 449,862.98
199 ₹ 16,156,249.70 ₹ 121,171.87 ₹ 449,862.98
200 ₹ 15,827,558.60 ₹ 118,706.69 ₹ 449,862.98
201 ₹ 15,496,402.31 ₹ 116,223.02 ₹ 449,862.98
202 ₹ 15,162,762.35 ₹ 113,720.72 ₹ 449,862.98
203 ₹ 14,826,620.09 ₹ 111,199.65 ₹ 449,862.98
204 ₹ 14,487,956.76 ₹ 108,659.68 ₹ 449,862.98
205 ₹ 14,146,753.46 ₹ 106,100.65 ₹ 449,862.98
206 ₹ 13,802,991.13 ₹ 103,522.43 ₹ 449,862.98
207 ₹ 13,456,650.59 ₹ 100,924.88 ₹ 449,862.98
208 ₹ 13,107,712.49 ₹ 98,307.84 ₹ 449,862.98
209 ₹ 12,756,157.35 ₹ 95,671.18 ₹ 449,862.98
210 ₹ 12,401,965.55 ₹ 93,014.74 ₹ 449,862.98
211 ₹ 12,045,117.32 ₹ 90,338.38 ₹ 449,862.98
212 ₹ 11,685,592.72 ₹ 87,641.95 ₹ 449,862.98
213 ₹ 11,323,371.69 ₹ 84,925.29 ₹ 449,862.98
214 ₹ 10,958,434.00 ₹ 82,188.25 ₹ 449,862.98
215 ₹ 10,590,759.27 ₹ 79,430.69 ₹ 449,862.98
216 ₹ 10,220,326.99 ₹ 76,652.45 ₹ 449,862.98
217 ₹ 9,847,116.47 ₹ 73,853.37 ₹ 449,862.98
218 ₹ 9,471,106.86 ₹ 71,033.30 ₹ 449,862.98
219 ₹ 9,092,277.18 ₹ 68,192.08 ₹ 449,862.98
220 ₹ 8,710,606.29 ₹ 65,329.55 ₹ 449,862.98
221 ₹ 8,326,072.85 ₹ 62,445.55 ₹ 449,862.98
222 ₹ 7,938,655.42 ₹ 59,539.92 ₹ 449,862.98
223 ₹ 7,548,332.36 ₹ 56,612.49 ₹ 449,862.98
224 ₹ 7,155,081.88 ₹ 53,663.11 ₹ 449,862.98
225 ₹ 6,758,882.01 ₹ 50,691.62 ₹ 449,862.98
226 ₹ 6,359,710.65 ₹ 47,697.83 ₹ 449,862.98
227 ₹ 5,957,545.50 ₹ 44,681.59 ₹ 449,862.98
228 ₹ 5,552,364.11 ₹ 41,642.73 ₹ 449,862.98
229 ₹ 5,144,143.87 ₹ 38,581.08 ₹ 449,862.98
230 ₹ 4,732,861.97 ₹ 35,496.46 ₹ 449,862.98
231 ₹ 4,318,495.46 ₹ 32,388.72 ₹ 449,862.98
232 ₹ 3,901,021.19 ₹ 29,257.66 ₹ 449,862.98
233 ₹ 3,480,415.87 ₹ 26,103.12 ₹ 449,862.98
234 ₹ 3,056,656.02 ₹ 22,924.92 ₹ 449,862.98
235 ₹ 2,629,717.96 ₹ 19,722.88 ₹ 449,862.98
236 ₹ 2,199,577.86 ₹ 16,496.83 ₹ 449,862.98
237 ₹ 1,766,211.72 ₹ 13,246.59 ₹ 449,862.98
238 ₹ 1,329,595.33 ₹ 9,971.96 ₹ 449,862.98
239 ₹ 889,704.32 ₹ 6,672.78 ₹ 449,862.98
240 ₹ 446,514.12 ₹ 3,348.86 ₹ 449,862.98
n payable over 20 years

- EMI

LOAN +

240

Chk 449,862.98

CBL
₹ 49,925,137.02
₹ 49,849,712.57
₹ 49,773,722.44
₹ 49,697,162.38
₹ 49,620,028.12
₹ 49,542,315.35
₹ 49,464,019.74
₹ 49,385,136.91
₹ 49,305,662.46
₹ 49,225,591.95
₹ 49,144,920.91
₹ 49,063,644.84
₹ 48,981,759.20
₹ 48,899,259.41
₹ 48,816,140.88
₹ 48,732,398.96
₹ 48,648,028.97
₹ 48,563,026.21
₹ 48,477,385.93
₹ 48,391,103.35
₹ 48,304,173.65
₹ 48,216,591.97
₹ 48,128,353.43
₹ 48,039,453.10
₹ 47,949,886.03
₹ 47,859,647.19
₹ 47,768,731.57
₹ 47,677,134.08
₹ 47,584,849.60
₹ 47,491,873.00
₹ 47,398,199.07
₹ 47,303,822.58
₹ 47,208,738.27
₹ 47,112,940.83
₹ 47,016,424.91
₹ 46,919,185.12
₹ 46,821,216.03
₹ 46,722,512.17
₹ 46,623,068.04
₹ 46,522,878.07
₹ 46,421,936.68
₹ 46,320,238.22
₹ 46,217,777.03
₹ 46,114,547.38
₹ 46,010,543.51
₹ 45,905,759.61
₹ 45,800,189.83
₹ 45,693,828.27
₹ 45,586,669.01
₹ 45,478,706.05
₹ 45,369,933.37
₹ 45,260,344.89
₹ 45,149,934.50
₹ 45,038,696.03
₹ 44,926,623.27
₹ 44,813,709.97
₹ 44,699,949.81
₹ 44,585,336.46
₹ 44,469,863.50
₹ 44,353,524.50
₹ 44,236,312.96
₹ 44,118,222.33
₹ 43,999,246.02
₹ 43,879,377.38
₹ 43,758,609.74
₹ 43,636,936.33
₹ 43,514,350.38
₹ 43,390,845.03
₹ 43,266,413.39
₹ 43,141,048.51
₹ 43,014,743.39
₹ 42,887,490.99
₹ 42,759,284.20
₹ 42,630,115.85
₹ 42,499,978.74
₹ 42,368,865.60
₹ 42,236,769.12
₹ 42,103,681.91
₹ 41,969,596.54
₹ 41,834,505.54
₹ 41,698,401.35
₹ 41,561,276.39
₹ 41,423,122.98
₹ 41,283,933.43
₹ 41,143,699.95
₹ 41,002,414.72
₹ 40,860,069.85
₹ 40,716,657.40
₹ 40,572,169.35
₹ 40,426,597.64
₹ 40,279,934.15
₹ 40,132,170.68
₹ 39,983,298.98
₹ 39,833,310.74
₹ 39,682,197.60
₹ 39,529,951.10
₹ 39,376,562.75
₹ 39,222,024.00
₹ 39,066,326.20
₹ 38,909,460.67
₹ 38,751,418.65
₹ 38,592,191.31
₹ 38,431,769.76
₹ 38,270,145.06
₹ 38,107,308.17
₹ 37,943,250.00
₹ 37,777,961.40
₹ 37,611,433.13
₹ 37,443,655.90
₹ 37,274,620.34
₹ 37,104,317.02
₹ 36,932,736.42
₹ 36,759,868.96
₹ 36,585,705.00
₹ 36,410,234.81
₹ 36,233,448.60
₹ 36,055,336.48
₹ 35,875,888.53
₹ 35,695,094.71
₹ 35,512,944.95
₹ 35,329,429.06
₹ 35,144,536.80
₹ 34,958,257.84
₹ 34,770,581.80
₹ 34,581,498.19
₹ 34,390,996.44
₹ 34,199,065.94
₹ 34,005,695.96
₹ 33,810,875.70
₹ 33,614,594.29
₹ 33,416,840.77
₹ 33,217,604.09
₹ 33,016,873.15
₹ 32,814,636.72
₹ 32,610,883.52
₹ 32,405,602.16
₹ 32,198,781.20
₹ 31,990,409.08
₹ 31,780,474.17
₹ 31,568,964.75
₹ 31,355,869.01
₹ 31,141,175.05
₹ 30,924,870.88
₹ 30,706,944.44
₹ 30,487,383.54
₹ 30,266,175.94
₹ 30,043,309.28
₹ 29,818,771.12
₹ 29,592,548.93
₹ 29,364,630.07
₹ 29,135,001.82
₹ 28,903,651.35
₹ 28,670,565.76
₹ 28,435,732.03
₹ 28,199,137.04
₹ 27,960,767.59
₹ 27,720,610.37
₹ 27,478,651.97
₹ 27,234,878.88
₹ 26,989,277.49
₹ 26,741,834.09
₹ 26,492,534.87
₹ 26,241,365.91
₹ 25,988,313.17
₹ 25,733,362.54
₹ 25,476,499.78
₹ 25,217,710.56
₹ 24,956,980.41
₹ 24,694,294.78
₹ 24,429,639.01
₹ 24,162,998.33
₹ 23,894,357.84
₹ 23,623,702.54
₹ 23,351,017.34
₹ 23,076,286.99
₹ 22,799,496.16
₹ 22,520,629.41
₹ 22,239,671.15
₹ 21,956,605.70
₹ 21,671,417.27
₹ 21,384,089.92
₹ 21,094,607.62
₹ 20,802,954.20
₹ 20,509,113.37
₹ 20,213,068.75
₹ 19,914,803.78
₹ 19,614,301.84
₹ 19,311,546.12
₹ 19,006,519.74
₹ 18,699,205.66
₹ 18,389,586.72
₹ 18,077,645.65
₹ 17,763,365.01
₹ 17,446,727.27
₹ 17,127,714.75
₹ 16,806,309.63
₹ 16,482,493.97
₹ 16,156,249.70
₹ 15,827,558.60
₹ 15,496,402.31
₹ 15,162,762.35
₹ 14,826,620.09
₹ 14,487,956.76
₹ 14,146,753.46
₹ 13,802,991.13
₹ 13,456,650.59
₹ 13,107,712.49
₹ 12,756,157.35
₹ 12,401,965.55
₹ 12,045,117.32
₹ 11,685,592.72
₹ 11,323,371.69
₹ 10,958,434.00
₹ 10,590,759.27
₹ 10,220,326.99
₹ 9,847,116.47
₹ 9,471,106.86
₹ 9,092,277.18
₹ 8,710,606.29
₹ 8,326,072.85
₹ 7,938,655.42
₹ 7,548,332.36
₹ 7,155,081.88
₹ 6,758,882.01
₹ 6,359,710.65
₹ 5,957,545.50
₹ 5,552,364.11
₹ 5,144,143.87
₹ 4,732,861.97
₹ 4,318,495.46
₹ 3,901,021.19
₹ 3,480,415.87
₹ 3,056,656.02
₹ 2,629,717.96
₹ 2,199,577.86
₹ 1,766,211.72
₹ 1,329,595.33
₹ 889,704.32
₹ 446,514.12
₹ 0.00
1) Estimate the Cash Flows (Initial, Recurring & Terminal)
2) Convert these to Present Value (because it is NOW that we are taking a decision)
3) We determine the NPV --- PV (Cash Inflows) (-) Initial Investments
4) If NPV is positive, it’s a "Good to go Project", else NOT
5) IRR is also estimated to reaffirm the decision (If IRR > COC --- it's a Good to go project; else NOT)
6) In case of NPV IRR conflict --- we should always go with NPV
7) For replacement projects, it's the ▲ which gains importance

*** These cash flows should be discounted using WACC (Weighted Average Cost of Capital)
to go project; else NOT)

e Cost of Capital)
A company is planning to invest in a project, $100 Million. The project is to be financed, maintaining a D/E of 1.5x.

Assume, effective post tax cost of debt is 6% and the cost of equity is 18%.

The cash flows are as under:

$ Mn
Year CF's
1 4
2 15
3 30
4 47
5 64

Calculate?

a) NPV
b) IRR
Comment on the financial viability of the project!

Capital Wts k
1.5 D 0.6 6%
1 E 0.4 18%

2.5 WACC 10.80%

FV = PV X

Hence PV = FV

$ Mn
Year CF's DF's PV
1 4 0.903 3.61
2 15 0.815 12.22
3 30 0.735 22.05
4 47 0.664 31.18 Tarun Kehair:
Since the NPV is positive ; it is
5 64 0.599 38.32
value adding project!!! Hence
should go ahead with it!!!
PV (CI's) 107.39
 Tarun Kehair:
Since the NPV is positive ; it is
value adding project!!! Hence
should go ahead with it!!!

Init Inv 100.00

NPV 7.39

Q Can you now find out the NPV's if the WACC is 12%, 14%, 16%?

IRR
COC NPV
10.80% 7.39 NPV PROF
5.00% 12.00
-100 6.00%
4 7.00% 10.00
15 8.00%
30 9.00% 8.00

47 10.00%
6.00
64 11.00%
12.00%
4.00
12.89% 13.00%
14.00% 2.00
15.00%
16.00% -
4.00% 6.00% 8.00% 10.00% 1

IRR > COC ACCEPT

IRR < COC REJECT

d, maintaining a D/E of 1.5x.

(1+r)^n

X 1 The number in the box is the

(1+r)^n Discounting Factor

Tarun Kehair:
Since the NPV is positive ; it is a
value adding project!!! Hence we
should go ahead with it!!!
 Tarun Kehair:
Since the NPV is positive ; it is a
value adding project!!! Hence we
should go ahead with it!!!

NPV PROFILE

6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00%

A firm is planning to invest Rs 25 Lacs in to a project that is expected to generate a Cash Flow of Rs 8 Lacs in the nex

This cash flow will grow @ 20% YOY until the end of 5 years from now.

The cost of capital deployed for the project is 7%.

Estimate the NPV & IRR and what would be your advise?

7% g= 20%
Year CF's DF's PV's
1 8.00 0.935 7.48
2 9.60 0.873 8.39
3 11.52 0.816 9.40
4 13.82 0.763 10.55
5 16.59 0.713 11.83

PV (CI's) 47.64

ICO 25.00

NPV 22.64

As the NPV is +ve --- it is a financially viable project

-25.00
8.00
9.60 IRR 32.51%
11.52
13.82
16.59

As the IRR > COC --- it is a financially viable project

sh Flow of Rs 8 Lacs in the next year.

PVGA0 = A1 X (1-((1+g)/(1+r))^n
r-g

1+g 120%
1+r 107%
r-g -13%

PVGA0 = 47.64
A Co has raised Capital as under for ensuing Projects:

$ Million
Bonds 500
Equity Shares 1,500

2,000

a) The Bonds have FV of $100 and have 5 years to maturity. They have been issued at a discount

b) The company forecasts dividends of $5 per share and the shares are currently trading at $50 a
expected to grow annually @8%.

Estimate the WACC. Assume tax rate to be 40%!

Excel fn Formula
YTM 8.26% 8.25% kd =

ke=
been issued at a discount of 5% & carry 7% annual coupons.

currently trading at $50 and the dividends and prices are

k wts
4.96% 0.25

18.00% 0.75

WACC 14.74%
 A company plans to invest Rs 100 Crores in a project, that will be financed by:

Rs Cr
Equity 35
12% Pref Shares 25
8% Term Loan 40

The dividends paid by the firm per latest financials was Rs 2.50 / share and dividends and prices are
expected to grow annually by 10%.

14 Million shares were issued. Tax Rates are 30%.

The Pref Shares have a Face Value of Rs 100 and were issued at a discount of 8%.

The cash flows to be generated by the project are estimated to be Rs 20 Crores annually over the next 7 years (life of the pr

Is the project financially viable, advise?

k w wk
Ke 21% 0.35 7.35%
#NAME? Ki 13.81% 0.25 3.45%
Kd 5.6% 0.4 2.24%
Weighted
Avg 13.04%

Year CF DF PV
1 20 0.885 17.693
2 20 0.783 15.652
3 20 0.692 13.846
4 20 0.612 12.249
5 20 0.542 10.836
6 20 0.479 9.586
7 20 0.424 8.480
NPV 88.342
y over the next 7 years (life of the project).
 By Equity By Debenture

EBIT 2000000 EBIT 2000000

Interest 0 Interest 1400000
PBT 2000000 PBT 600000
Tax @50% 1000000 Tax @50% 300000
PAT 1000000 PAT 300000
No of shares 2000000 No of shares 1000000
EPS 0.5 EPS 0.3

EBIT 4000000 EBIT 4000000

Interest 0 Interest 1400000
PBT 4000000 PBT 2600000
Tax @50% 2000000 Tax @50% 1300000
PAT 2000000 PAT 1300000
No of shares 2000000 No of shares 1000000
EPS 1 EPS 1.3
Debenture EBIT EPS(Eq) EPS(Debt)
4000000.00 1.00 1.30
1000000.00 Chart Title
2000000.00
12.00
3000000.00
4000000.00 10.00
5000000.00
6000000.00 8.00
7000000.00
8000000.00 6.00

9000000.00
4.00
10000000.00
2.00

0.00
0.00 2000000.00 4000000.00 6000000.00 8000000.00 10
Chart Title

6000000.00 8000000.00 10000000.00 12000000.00