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-: Time Value of Money:Future Value of a single cash flow :Q:- An inverter invest Rs 1000 at an interest rate of 5%.

How shall it grows after 3 years.. Ans:- A=P(1+i/100)n =1000(1+5%/100)3 =1157.63

Future value of an annuity Q:- Suppose a person deposit Rs 5,000/- at the end of each year for four years at an interest rate of Rs 6% . how much amount has been accumulated at the end of four years.

Ans:-A=Pn * CVFArn =5000*4.3746 =21873

Present Value Of a single cash flow :-

Q:- a person wants to find out the present value of Rs 50000 to be received after 15 years. The rate of interest being 9% Ans :A=50000*PVF9%*15 =50000*.275 =13,750 Present value of an annuity :Q:- Suppose a person will be receiving Rs 5,000 every year for four years at a rate of interest of 10%. Calculate the present value of the amount deposited by him in lumpsum. Ans:- A=5000*PVFA =5000*3.170 =15850

Present value of perpetuity:Formula Perpetuity/rate of interest Q:- An invester expects a perpetuity some of 500 from investment. What is the present value if the rate of interest is 10%.

Ans:- 500*100/10=5000 Present value of uneven cash flows Q:- An invester has an opportunity of receiving Rs 1000, Rs 1500, Rs 800, Rs 1100, and rs 1400 at the end of 1 to 5 years. Calculate the present value of these streems of cash flows if the rate of interest is 8%. Ans :1=.926*1000=926 2=.857*1500=1285.5 3=.794*800=635.2 4=.735*1100=808.5 5=.681*1400=953.4

Present value of growing perpetuity Formula=P/i-g Q:-Suppose devident of Rs 66 is given to each share holder where the expected groth is 10% indefenetely and the rate of interest is 21% . Calculate its present value.. Ans:- 66/21-10=600

Future value of annuity due Formula = Annuity*CVFA*1+Ri Q:- Suppose a person deposits Rs 100 in your saving account at the beginning of each year for 4 years. To earn a interest of 6%. How much will be the compounded value at the end of 4 years. Ans:- 100*CVFA6%*4*(1+.06) 100*4.375*1.06 Examples Q) Asis bought a share 15 years ago for Rs 10/-. It is now selling at Rs 27.60. What is the compound groth rate in the price of the share. Ans:-27.60/10=CVF15yr 2.76=CVF15yr As per the CVF table for 15 year at 7% rate the future value will be 2.76

Q)Rahul is borrowing Rs 5000000 to buy a flat. If he pays equal installments for 25 years at an interest rate of 4%. Calculate the amount of each installment. Ans:- 5000000/ PVFA25*4%


Q) how long will it take to duble your money if it grows 12% annually. Ans:- F=CVF*A 2x=CVF*x CVF12%=2 6yrs Q) Your father has promised you to give you Rs 100000 on his 25 th birth day. Today its your 16th birthday. He wants to know if he decided to make annual payment into a fund each year what would be the installments .if the rate of interest is 8% of the fund. Ans:- 100000/12.488 =8076.8738

Q) Souvik purchased a vehicle of Rs 800000 by making a down payment of Rs 150000 and the reminder of the balance in equal installments of Rs 150000 for 6 years . What is the rate of interest to Suvik. Ans:-800000-150000=650000

650000/150000=4.33 Ans = 10%