1.1 Time
The Valueisofthat
principle Money (TVM):
money available now is worth more than the same amount in the
future due to its earning capacity. This core concept underpins most financial decision-
making.
1.2 Present vs Future Value:
Present Value (PV): What a future amount is worth today.
Future Value (FV): What an amount today will grow to in the future. They’re connected
via formulas involving interest rates and time.
1.3 Role of Compounding:
Compounding boosts the value of money over time. The more frequent the
compounding, the greater the growth — making it essential in TVM.
QUESTION 2
2.1
Assuming a lumpsum of 10000
FV ZAR 10,000.00
1/YR 8.0%
P/YR 1.00
*P/YR 5.00
PV ZAR (6,805.83)
$2.20
PV ZAR 10,000.00
1/YR 5%
P/YR 1.00
*P/YR 10.00
FV ZAR (16,288.95)
PMT ZAR 1,000.00
1/YR 6%
P/YR 1.00
*P/YR 5.00
FV ZAR (5,637.09)
The Valueisofthat
principle Money (TVM):
money available now is worth more than the same amount in the
future due to its earning capacity. This core concept underpins most financial decision-
making.
1.2 Present vs Future Value:
Present Value (PV): What a future amount is worth today.
Future Value (FV): What an amount today will grow to in the future. They’re connected
via formulas involving interest rates and time.
1.3 Role of Compounding:
Compounding boosts the value of money over time. The more frequent the
compounding, the greater the growth — making it essential in TVM.
QUESTION 2
2.1
Assuming a lumpsum of 10000
FV ZAR 10,000.00
1/YR 8.0%
P/YR 1.00
*P/YR 5.00
PV ZAR (6,805.83)
$2.20
PV ZAR 10,000.00
1/YR 5%
P/YR 1.00
*P/YR 10.00
FV ZAR (16,288.95)
PMT ZAR 1,000.00
1/YR 6%
P/YR 1.00
*P/YR 5.00
FV ZAR (5,637.09)
