Skip to main content

EXAMPLES AND FORMULA TIME VALUE OF MONEY

EXAMPLES AND FORMULA TIME VALUE OF MONEY


EXAMPLES 1

     A)     n=3   PV=100 i=100%,  10%,  0%    FV=?       
FV=PV (1+I)n  

WHEN  i=100%
FV=PV (1+I)n  
 =100(1+ 100/100)3
=100 (2)3 
Fv=800

Same like  10% answer is 133.1   and  0% answer is 100

 FV cannot be calculated of 100 by table’s formula.
Ans: future value is more than calculated values.

EXAMPLE 2

N=3 FV=100 i=10% , 100%, 0%

When i=10%       10/100 = 0.1
PV = FV/(1+i)n
=100/(1+0.1)3
=75.13

Same the answer of 100% is 12.5  and  0% is 100

Present value is less than given value

Table formula
PV=Fv x PVIF I,n
=100 x PVIF 10%,3
x
x

Compound more than a year


Future value
FV=PV(1+i/m)nxm
M= semiannualy=2            (six month)

M=quarterly=4
M=daily=360
M=12 monthly
M=weekly=52
M=continuously=∞
FV=PV X (e) ixn
TABLE
FV=PV X FVIF i/m ,nxm
FV=PV x eixn
Constant  e= 2.7182
Present value
PV=FV/(1+i/m)nxm
m = ∞
FV/eixn   = PV
PV=FV x PVIF i/m, nxm


FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING

MBA NOTES FINANCIAL MANAGEMENT
Labels:

Comments

Post a Comment

Popular posts from this blog

MANAGEMENT

MANAGEMENT Definition: A set of activities planning, organizing, staffing, leading and controlling to achieve the organizational goals. or Management is the process of designing and maintaining an environment for efficiently accomplishing selected aims. or Set of activities (planning, organization, leading,controlling) directed at an organization resources (finance, human, physical and information) to achieve the organizational goals in an effecient and effective manner is called management. Efficient: The efficient mean do work be fore the due date. Effective: To complete the work in time. eg. if we say someone to complete task in 10 days and he complete the task in 10 days no more or no less that person called effective person. Manager: A person who perform all organization activities are called manager. Management Resoureces: There are four basic management resources. Finance Human Physical Information Finance: Finance mean the assets like as C...
1 comment
Read more

MBA NOTES:TYPES OF FINANCIAL ANALYSIS

TYPES OF FINANCIAL ANALYSIS Following are the various types of financial analysis. A. On the basis of material used. 1. External Analysis Analysis of financial statements may be carried out on the basis of published information. i.e.., information made available in the annual report of the enterprise. such analysis are usually carried out by those who do not have access to the detailed accounting records of the Co. i.e., Banks, Creditors etc. 2. Internal Analysis Analysis may also be based on detailed information available within the Co. which is not available to the outsiders. such analysis is called internal analysis. this type of analysis id of a detailed one and is carried out on behalf of the management for the purpose of providing necessary information for decision making, such analysis emphasizes on the performance appraisal and assessing the profitability of different activities. B. According to objectives ...
1 comment
Read more

TYPES OF FINANCIAL MARKETS

FINANCIAL MARKET DEFINATION: A market where securities are sold and purchased called financial market. Types of Financial Markets Primary Market: When a company issue its securities first time in the market that market is called primary market. Secondary Market: The market where issued securities are sold and purchased is called secondary market. Money Market: A market where securities who's maturity are less than or equal to one year are sold and purchased are called money market. a) T bill T bill are issued by Govt. when they need the money and Govt mostly issue T bill when thsre budget is going to budget is deficit or have. These securities maturity is less than one year and Govt. can issue in any country.Its a less risky investment. b) Commercial Paper Commercial paper are issued by companies. These types of securiteis issue mostly that company that have high credit worthiness in market and goodwill in the market. These types of investment are risky i...
2 comments
Read more