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24-5-2023 Shu Sfi
24-5-2023 Shu Sfi
DANIYAL 27
MEHAK 18
MEHTAB
SAAM
TIME VALUE OF
1 TIME
2 INFLATION INTEREST RATE
SIMPLE INTEREST
COMPOUNDING INTEREST
SIMPLE FV 8,000.00
COMPOUNDING FV 8954.2385
DIFFERENCE 954.24
EAR=(1+APR/M)^M-1
M = NO OF PERIODS
BANK OFFER 12% ANNUALY
BANK OFFER 12% SEMI ANNUALY
BANK OFFER 12% QUARTERLY
BANK OFFER 12% MONTHLY
BANK OFFER 12% WEEKLY
12% DAILY
8.30% 0.0066667
1.0066667
1.0829995
8.3000%
PV=FV/(1+IR)^N
FV=PV*(1+IR)^N
1 IF IR INCREASE THAN FV INCREASE & VISE VERSA
2 IF N INCREASE THAN FV INCREASE & VISE VERSA
PV IR 10
0 1 2 3 4
6785 1500 ? 1800 2400
PV=1500/(1+10%)^1 1363.63636
PV=1800/(1+10%)^3 1352.36664
PV=2400/(1+10%)^4 1639.23229
PV 4355.2353
6785-4355
2430 FV=2430*(1+10%)^2
2940.3
TIME VALUE OF MONEY
INTEREST RATE
FOR 3 YEARS
OMPOUNDING FOR 3 YEARS
HOW MUCH
IA=5000*6%*10
FV=5000+3000
FV=PV(1+I)^N
WITHOUT COMPUNDING
WITH COMPOUNDING
APR EAR
12% 12%
12% 12.36%
12% 12.55%
12% 12.68%
12% 12.73%
12% 12.75%
EAR=(1+12%/1)^1-1
12%
COMPOUNDING EFFECT
N*M
IR/M
SIMPLE
IA=PV*IR*N 1000*10%*3 300
FV=PV+IA 1000+300 1300
COMPOUNDING
IA=PV*IR 1000*10% 100
FV1=1000+100 1100
IA=1100*10% 110
FV2=1100+110 1210
IA=1210*10% 121
FV3=1210+121 1331
BANK B
HOW MUCH
1331-1300 31
3000
8000
5000*(1+6%)^10 8954.238
COMPUNDING RATE M
ANNUALY 1
MPOUNDING SEMI ANNUALY 2
QUARTERLY 4
MONTHLY 12
WEEKLY 52
DAILY 365
0.36%
0.19%
0.13%
0.05%
0.02%
EAR=(1+12%/2)^2-1
12.360%
? FV=1000*(1+12%)^5
1000 1762.3416832
12%
5
20194
5,000,000.00 5000000/(1+12%)^8
12 2,019,416.14
8