Name: - RISHI KALE

Roll No. – 27
TY BBA,
 Today’s rupee is not equal to tomorrow’s rupee.

 why today’s rupee is not equal to that of

tomorrow?

 This is due to the following three factors:

Inflation
Risk
Opportunity
 Postponing the use of a rupee means postponing
consumption.
 Since money has a time value means we must take

this time value of money into consideration when we

are making financial decisions.
 There are four fundamental time value of money

calculations.  
 Future Value of a Rupee calculation (FV)
 Present Value of a Rupee calculation (PV)
 Future Value of an Annuity (FV of Annuity)
 Present Value of an Annuity (PV of Annuity)  
 Financial decisions at Firm Level:
 (a) Investment Decisions
 (b) Financing Decisions

 Financial Decisions at Individual level:

 (a) Saving Deployment
 (b) Borrowing
oAs most financial decisions affect the cash flows over a
long period of time, the explicit recognition of the time
value of money becomes important for rational and
optimal decisions.
 Compound interest is always assumed in Time Value
of Money problems.
 In Time Value of Money applications, payments must

represent all outflows (negative amount) or all

inflows (positive amount).
 Single Amount
 Annuity

 Since money has time value, the present value of a

promised future amount is worth less the longer you
have to wait to receive it.
 Single Amount
 Annuity

 Since money has time value, we naturally expect the

future value to be greater than the present value.
 The difference between the two depends on the

number of compounding periods involved and the

going interest rate. 
 Time Value of Money is an important concept in
financial management. It can be used to compare
investment alternatives and to solve problems
involving loans, mortgages, leases, savings, and
annuities.
 Pearson Education Limited 2004, Fundamentals of Financial
Management, 12/e, Created by: Gregory A. Kuhlemeyer,
Ph.D., Carroll College, Waukesha, WI

 Notes on Financial Management BY MAHESH K. MADAN

 Journal of College Teaching & Learning Volume 1, Number 7

 The Time Value of Money: A Clarifying and
Simplifying Approach Norman D. Gardner, Utah
Valley State College
 http://www.getobjects.com/Components/Finance/

TVM/concepts.html
 http://wiki.answers.com/Q/FAQ/1786-10
 http://www.9-Zone.org/Finance/Home.html
 http://in.answers.yahoo.com/question/nextQuestio
n;_ylt=AvDsU8UQBQurSbNFHUZynAuHHwx.;
_ylv=3?
qid=20080421125630AAqcRgQ&cid=39654532
2&state=resolved 

 http://cbdd.wdu.edu/kewlcontant/cdoutput/TOm5
05/Article.html

 http://www.buzzle.com/authors.asp?author=3299