Financial Management

6

Time Value of Money

“The safe way to double your money is to fold it over once and put it in your pocket.”

 

Frank Hubbard

LEARNING OBJECTIVES

After reading the chapter, you will be able to:

1. Understand the nature and concept of time value of money.

2. Discuss the concepts of simple interest and compound interest.

3. Calculate the present and future value of money.

4. Understand the concept and calculation for annuity and perpetuity.

5. Understand the concept of compounding and discounting n number of times a year.

6. Look at the concept of loan amortization.

FINANCE IN PRACTICE

India's annual turnover of cement plants during the 1960s was around INR 100 billion. The first cement plant was set up by the Indian Cement Company Limited (ACC) at Porbandar, ...