BFM Numericals Solved · Part 1: Toolkit

Chapter 2: Time value of money

Why ₹1 today is worth more than ₹1 next year, and the few formulas that price every loan, deposit and project.

Open Chapter 2 in the e-book The book and its prices

Buyers of the e-book, or of the print copy, which includes it, read the whole chapter. Everyone can read the free sample, pages 1 to 24 of the e-book.

In this chapter

2.1Future valuep. 19
2.2Present valuep. 20
2.3Compounding more than once a yearp. 21
2.4Annuities: the value at the endp. 22
2.5Annuities: the value todayp. 23
Four 30-second routesp. 24
2.6Loans and EMIsp. 25
2.7Net present valuep. 28
2.8Internal rate of returnp. 29
2.9Real and nominal ratesp. 30
Which formula? A map of the chapterp. 31
Exam traps and conventionsp. 32
Practice: 30 questions in three roundsp. 33
Answers, with every wrong option explainedp. 36
Make it stickp. 39
Chapter 2 on one pagep. 40

Corrections and updates

None for this chapter so far. Every correction to the book, and any rule that changes after its date, is listed on the errata page.