24.6. Applications of TVM in Business & Tech Startups

Try these first

1. 1.

   What is capital budgeting?

   Hint

   Think about how companies decide whether to invest in a project.

2. 2.

   Define EMI.

   Hint

   Consider how loans are structured.

3. 3.

   What does Capital Budgeting help determine?

   • Future cash flow assessment
   • Project investment worthiness
   • Stock price evaluation

   Hint

   Think about decision-making in finance.

4. 4.

   True or False: Loan amortization determines the future value of a loan.

   • True
   • False

   Hint

   Consider the role of amortization.

5. 5.

   Design a capital budgeting model for a software startup considering two projects with different expected cash flows over five years. Use NPV to decide which project to pursue.

   Hint

   Estimate cash flows carefully!

6. 6.

   A startup has an option to lease software for ₹5,000 per year for 3 years or buy it for ₹15,000 upfront. Calculate and compare the total costs using TVM principles to decide the best option.

   Hint

   Don't forget to account for the time value in decisions!