1. WELCOME U ALL
WELCOME U ALL
WELCOME U ALL

2. Time value of money
• Thetime value of money isthevalueof money
with agiven amount of interest earned or inflation
accrued over agiven amount of time.
• Theultimateprinciplesuggeststhat acertain amount
of money today hasdifferent buying power than the
sameamount of money in thefuture. Thisnotion
existsboth becausethereisan opportunity to earn
interest on themoney and becauseinflation will drive
pricesup, thuschanging the"value" of themoney.
Thetimevalueof money isthecentral concept in
finance theory.

3. TIME VALUE OF MONEYTIME VALUE OF MONEY
A B10000 loan
One Year
Market value of interest 10%
Reasons
1. More purchasing power
2. An investor can profitably invest which make him to give a
higher value
Reasons
1. More purchasing power
2. An investor can profitably invest which make him to give a
higher value

4. TIME VALUE OF MONEYTIME VALUE OF MONEY
Compounding value
concept
(Future value of present
money)
Discounting or
Present value concept
(Present value of future
money)

5. A=P(1+i)n
A=Amt @ the period of end
P=Amt @ the beginning
n=No:of years
i=Interest