ILLUSTRATING FV FUNCTION

Amount Annual
Years of Investment invested each Interest
year Rate

40 20000 8.00%

When are the

Final Amount upon investments
retirement
made?

Rs. 5,181,130.37 0 <-- end of the year

Rs. 5,595,620.80 1 <-- start of the year

What if you have some money in your account to stat with?

 the year ($5,181,130.37)

of the year ₹ -5,595,620.80

 WHICH IS A BETTER DEAL?

PLAN 1 PLAN

Flat Payment of Yearly

Rs 11,000 installment

3000

PV of the cash flow

($10,814.33) -Rs. 10,814.33

₹ -12,112.05 -Rs. 12,112.05

ICH IS A BETTER DEAL?

PLAN 2

Annual
For how many
Interest
years?
Rate

12.00% 5

When are the

PV of the cash flow payments made?

-Rs. 10,814.33 0 <-- end of the year

-Rs. 12,112.05 1 <-- start of the year

 AMORTIZATION SCHEDULE

Loan Amount 10,000

Annual Rate 8.00%
Monthly Rate 0.67% 0.67%

Installment Rs1,037.03 ₹ 1,037.03

Outstanding balance Periodic Outstanding balance after

MONTH
before the payment Payment the payment

0 Rs10,000.00 Rs10,000.00
1 Rs10,066.67 Rs1,037.03 Rs9,029.64
2 Rs10,133.78 Rs1,037.03 Rs9,096.75
3 Rs10,201.34 Rs1,037.03 Rs9,164.31
4 Rs10,269.35 Rs1,037.03 Rs9,232.32
5 Rs10,337.81 Rs1,037.03 Rs9,300.78
6 Rs10,406.73 Rs1,037.03 Rs9,369.70
7 Rs10,476.10 Rs1,037.03 Rs9,439.07
8 Rs10,545.95 Rs1,037.03 Rs9,508.92
9 Rs10,616.25 Rs1,037.03 Rs9,579.22
10 Rs10,687.03 Rs1,037.03 Rs9,650.00

<-- a check to see that the full loan has been amorti
CHEDULE

Interest Principal
MONTH
Repaid Repaid

0
Rs66.67 Rs970.36 1
2
3
4
5
6
7
8
9
10

an has been amortized

Outstanding balance before the Periodic Outstanding Interest
balance after the
payment Payment Repaid
payment

Rs10,000.00 Rs10,000.00
Rs10,066.67 Rs1,037.03 Rs9,029.64 Rs66.67
Rs9,089.83 Rs1,037.03 Rs8,052.80 Rs60.20
Rs8,106.49 Rs1,037.03 Rs7,069.46 Rs53.69
Rs7,116.59 Rs1,037.03 Rs6,079.56 Rs47.13
Rs6,120.09 Rs1,037.03 Rs5,083.06 Rs40.53
Rs5,116.95 Rs1,037.03 Rs4,079.92 Rs33.89
Rs4,107.12 Rs1,037.03 Rs3,070.09 Rs27.20
Rs3,090.55 Rs1,037.03 Rs2,053.52 Rs20.47
Rs2,067.21 Rs1,037.03 Rs1,030.18 Rs13.69
Rs1,037.05 Rs1,037.03 Rs0.02 Rs6.87
Principal Repaid

Rs970.36
Rs976.83
Rs983.34
Rs989.90
Rs996.50
Rs1,003.14
Rs1,009.83
Rs1,016.56
Rs1,023.34
Rs1,030.16
 AMORTIZATION SCHEDULE

Loan Amount 10,000

Monthly Rate 0.67%
Installment Rs1,037.03

Outstanding balance Periodic Outstanding balance

MONTH
before the payment Payment after the payment

0 Rs10,000.00 - Rs10,000.00
1 Rs10,066.67 Rs1,037.03 Rs9,029.64
2 Rs10,133.78 Rs1,037.03 Rs9,096.75
3 Rs10,201.34 Rs1,037.03 Rs9,164.31
4 Rs10,269.35 Rs1,037.03 Rs9,232.32
5 Rs10,337.81 Rs1,037.03 Rs9,300.78
6 Rs10,406.73 Rs1,037.03 Rs9,369.70
7 Rs10,476.10 Rs1,037.03 Rs9,439.07
8 Rs10,545.95 Rs1,037.03 Rs9,508.92
9 Rs10,616.25 Rs1,037.03 Rs9,579.22
10 Rs10,687.03 Rs1,037.03 Rs9,650.00

<-- check to see that the full loan has been amorti
LE

Interest Principal
Repaid Repaid

- -
Rs66.67 Rs970.37 $ (66.67) ₹ 970.37
Rs60.20 Rs976.83 $ (60.20) ₹ 976.83
Rs53.69 Rs983.35 $ (53.69) ₹ 983.35
Rs47.13 Rs989.90 $ (47.13) ₹ 989.90
Rs40.53 Rs996.50 $ (40.53) ₹ 996.50
Rs33.89 Rs1,003.15 $ (33.89) ₹ 1,003.15
Rs27.20 Rs1,009.83 $ (27.20) ₹ 1,009.83
Rs20.47 Rs1,016.56 $ (20.47) ₹ 1,016.56
Rs13.69 Rs1,023.34 $ (13.69) ₹ 1,023.34
Rs6.87 Rs1,030.16 $ (6.87) ₹ 1,030.16

oan has been amortized

 AMORTIZATION SCHEDULE

Loan Amount 10,000

Annual Rate 5%
Installment Rs2,309.75 ₹ 2,309.75

Outstanding
Outstanding balance after
YEAR balance before the Periodic Payment
payment the payment

0 Rs10,000.00 - Rs10,000.00
1 Rs10,500.00 Rs2,309.75
2 Rs11,025.00 Rs2,309.75
3 Rs11,576.25 Rs2,309.75
4 Rs12,155.06 Rs2,309.75
5 Rs12,762.82 Rs2,309.75

<-- a check to see that the full loan has been amortized

Outstanding
Outstanding balance after
YEAR balance before the Periodic Payment the payment
payment

0 Rs10,000.00 Rs10,000.00
1 Rs10,500.00 Rs2,309.75 Rs8,190.25
2 Rs8,599.76 Rs2,309.75 Rs6,290.01
3 Rs6,604.51 Rs2,309.75 Rs4,294.76
4 Rs4,509.50 Rs2,309.75 Rs2,199.75
5 Rs2,309.74 Rs2,309.75 Rs0.01-

<-- a check to see that the full loan has been amortized
ULE

Interest Principal
Repaid Repaid

- -

as been amortized

Interest Principal
Repaid Repaid

- -
Rs 500.00 Rs1,809.75
Rs 409.51 Rs1,900.24
Rs 314.50 Rs1,995.25
Rs 214.74 Rs2,095.01
Rs 109.99 Rs2,199.76

as been amortized
Loan Amount Rs. 80,000.00

Months 120 10

Installment Rs. 1,000.00

Monthly Rate 0.72% 0.72% 0.72%

Annual Rate 8.69% 8.69%

Loan Amount Rs. 100,000.00

Annual Rate 8%

Installment Rs. 10,000.00

Years required
for 20.91
amortization $20.91