TIME VALUE OF MONEY

Interest rates, compounding and future value

(Book IM Pandey)
Before making any investment decision, one of the key elements you face is working out the real rate of return on your investment.
Simple interest is interest on the principle amount while compound interest is when your principle and any earned interest earned interest. The interest rate is applied to the original principle and any accumulated interest.
Compound interest is critical to investment growth. With simple interest, interest is paid just on the principal. With compound interest, the return that you receive on your initial investment is automatically reinvested. In other words, you receive interest on the interest.

Future Value = Present Value (1+r)^n
r= interest rate
n= time period

Future value of today's Rs 100 @10% per annum after one year will be Rs. 110/-
Thus compounding technique is use to find the future value of the investment

Future value of Annuity

WE can......

Join Now to view the rest of this term paper!
Members: Login to view this research paper.

Title: Tmv
Approximate Word Count: 935
Approximate Pages: 4 (250 words per double-spaced page)

With the Term Papers Lab Membership Pass, you get instant access to every essay on this site, including this essay on Tmv, for as long as you remain a member.

Other essays sites charge almost $100 for a single term paper. At Term Papers Lab, you can get instant access to over 100,000 research papers for as little as $29.95!