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
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x
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x
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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
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Present value
PV=FV/(1+i/m)nxm
m = ∞
FV/eixn = PV
PV=FV x PVIF i/m, nxm
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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
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