ILLUSTRATING FV FUNCTION

Years of Investment Amount Annual

invested each Interest
year Rate

40 20000 8.00%

When are the

Final Amount upon
investments
retirement
made?

Rs. 5,181,130.37 0 <-- end of the year

Rs. 5,595,620.80 1 <-- start of the year

 WHICH IS A BETTER DEAL?

PLAN 1 PLAN 2

Flat Payment of Yearly

Rs 11,000 installment

3000

PV of the cash flow

-Rs. 10,814.33

-Rs. 12,112.05
TTER DEAL?

PLAN 2

Annual
For how many
Interest
years?
Rate

12.00% 5

When are the

the cash flow payments made?

10,814.33 0 <-- end of the year

12,112.05 1 <-- start of the year

 AMORTIZATION SCHEDULE

Loan Amount 10,000

Annual Rate 8.00%
Monthly Rate 0.67%

Installment Rs1,037.03

Outstanding balance Periodic Outstanding balance after

MONTH
before the payment Payment the payment
0 Rs10,000.00 - Rs10,000.00
1 Rs10,066.67 Rs1,037.03 Rs9,029.63
2 Rs9,089.83 Rs1,037.03 Rs8,052.80
3 Rs8,106.49 Rs1,037.03 Rs7,069.45
4 Rs7,116.58 Rs1,037.03 Rs6,079.55
5 Rs6,120.08 Rs1,037.03 Rs5,083.05
6 Rs5,116.94 Rs1,037.03 Rs4,079.90
7 Rs4,107.10 Rs1,037.03 Rs3,070.07
8 Rs3,090.54 Rs1,037.03 Rs2,053.51
9 Rs2,067.20 Rs1,037.03 Rs1,030.16
10 Rs1,037.03 Rs1,037.03 Rs0.00-

<-- a check to see that the full loan has been amorti
N SCHEDULE

Interest Principal
Repaid Repaid
- -
Rs66.67 Rs970.37
Rs60.20 Rs976.83
Rs53.69 Rs983.35
Rs47.13 Rs989.90
Rs40.53 Rs996.50
Rs33.89 Rs1,003.15
Rs27.20 Rs1,009.83
Rs20.47 Rs1,016.56
Rs13.69 Rs1,023.34
Rs6.87 Rs1,030.16

an has been amortized

 AMORTIZATION SCHEDULE

Loan Amount 10,000

Monthly Rate 0.67%
Installment Rs1,037.03

Outstanding balance Periodic Outstanding balance

MONTH
before the payment Payment after the payment

0
1
2
3
4
5
6
7
8
9
10

<-- check to see that the full loan has been amorti
LE

Interest Principal
Repaid Repaid

Rs66.67 Rs970.37
Rs60.20 Rs976.83
Rs53.69 Rs983.35
Rs47.13 Rs989.90
Rs40.53 Rs996.50
Rs33.89 Rs1,003.15
Rs27.20 Rs1,009.83
Rs20.47 Rs1,016.56
Rs13.69 Rs1,023.34
Rs6.87 Rs1,030.16

oan has been amortized

 AMORTIZATION SCHEDULE

Loan Amount 10,000

Annual Rate 5%
Installment

Outstanding
Outstanding balance after
YEAR balance before the Periodic Payment
the payment
payment

0 Rs10,000.00 -
1
2
3
4
5

<-- a check to see that the full loan has been amortized
E

Interest Principal
Repaid Repaid

- -

s been amortized
Loan Amount Rs. 80,000.00

Months 120

Installment Rs. 1,000.00

Monthly Rate 0.72%

Annual Rate 8.69%

Loan Amount Rs. 100,000.00

Annual Rate 8%

Annual Installm Rs. 10,000.00

Years required 20.91

for
amortization