COMPOUNDING ( FUTURE VALUE)

FUTURE VALUE of Single Cash Flow { FV=PV*(1+r)^n}

PRESENT VALUE (PV) 5,000
YEARS(NPER) 10
RATE% 5%
FUTURE VALUE (FV) 8,144 ₹ -8,144.47
₹ -8,144.47
8144.47313388721

NON ANNUAL COMPOUNDING {FV=PV*(1+r/m)^m}

PRESENT VALUE (PV) 1,000
NO. of period 2
RATE% 12%
Half yearly 2 1123.6
Quarterly 4 1125.5088
Monthly 12 1126.825
Daily 365 1127.4746

Example 1: {(1+r/m)^m}
PV 10000

Rate of interest 12% 12%

Period 12 1.126825 12 0.1268
Rate of interest 12.25% 12.25%
Period 2 1.1262516 2 0.1263

FUTURE VALUE OF SERIES OF EQUAL CASH FLOWS OR ANNUITY OF C

Long Method
PV 1000
Rate of interest 10%
same amt every year for 3 years
Year 1 1000
year 2 1100
Year 3 1210
Total 3310

Short Method
FV=Annuity Amount*CVAF 3310
1000*3.310
[1+r)^t-1]/r
Example 1:
PV 10000
Years 10
Rate of Interest 10%
Total (10000*15.937) 159370
Rate of Interest 9%
Total (10000*15.193) 151930
Rate of Interest 11%
Total (10000*16.722) 167220

Example 2:
PV 3000
Rate of Interest 9%
begin in year 12
annuity year 4

4 years 13719
3000*4.537
OR ANNUITY OF CASH FLOWS {FV= Annuity Amt*CVAF}
DISCOUNTING ( PRESENT VALUE)
PRESENT VALUE OF FUTURE SUM {PV=FV/(1+r)^n}
Future Value 1080
Interest 8%
Time Period 1

Present Value ₹ -1,000.00

{PV=FV*PVF}

FV 1500
ROI 10%
Years 3

1500*0.751
Future value*PVF 1126.5 1126.5 ₹ -1,126.97
calculator ans Pv Formula

PV OF SERIES OF EQUAL FUTURE CASH FLOWS OR ANNUITY { PV=ANNUITY A

Annuity Amt 900
PVAF 2.487

Formula 2238.3

Example:
ROI 12%
Period 12
Amt 100
PVAF 6.194

619.4

PERPETUITY {PVp=Annual Cash Flow/r}

Future Value 2,500
Rate Of Interest 12%
Formula 20833.333

Example 2.3
Annual cash flow 80
Rate Of Interest 8%

At Rate of Interest 8%: 1000

At Rate of Interest 5%: 1600

FUTURE & PRESENT VALUE OF ANNUITY DUE { FV=Annuiy Amt*CVA For PVAF*(1+r) }

Rate Of Interest 6% 6%
Period 4 4
Deposit 100 1000
CVAF 4.375

Formula ( Future Value) ₹ -463.71

Present Value ₹ -3,673.01

GROWING PERPETUITY {PV= Cash Flow1/(r-g)}

{ PV=ANNUITY Amt*PVAF}