1.3. Outline of Today's Presentation

Try these first

1. 1.

   What is the formula for calculating Future Value?

   Hint

   Think about how interest applies over time.

2. 2.

   Define Present Value.

   Hint

   Consider its context in time.

3. 3.

   What does the time value of money imply?

   • A sum is worth less today than in the future.
   • A sum is worth more today than in the future.
   • Both options are equal.

   Hint

   Think about investing vs. waiting.

4. 4.

   Is the future value of money higher when interest rates increase?

   • True
   • False

   Hint

   Consider how investments perform over time.

5. 5.

   A company needs 15,00,000 for equipment replacement in 10 years. If they can earn 8% on their savings, how much do they need to deposit today?

   Hint

   Apply the present value formula you learned.

6. 6.

   Calculate the future value of a monthly deposit of 5,000 for 12 years at an interest rate of 5%. What do you expect to have saved?

   Hint

   Don’t forget to account for each monthly deposit's time value!