Comments on: Doing the Maths: Time Value of Money http://ranjanvarma.com/time-value-of-money/ Changing the way we learn and manage our money Thu, 11 Mar 2010 14:13:22 +0500 http://wordpress.org/?v=2.9.1 hourly 1 By: Platinum Financial Associates http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-3557 Platinum Financial Associates Fri, 24 Jul 2009 08:45:21 +0000 http://ranjanvarma.com/?p=601#comment-3557 The saving money could be used when they really need money in such emergency condition. The money would be useful when the unexpected events happen and frequently they don’t have any enough preparation. I personally always save some money even though it’s only a little since I’ve realized this would be useful in the future. The saving money could be used when they really need money in such emergency condition. The money would be useful when the unexpected events happen and frequently they don’t have any enough preparation. I personally always save some money even though it’s only a little since I’ve realized this would be useful in the future.

]]> By: chitu http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-3418 chitu Tue, 14 Jul 2009 08:45:26 +0000 http://ranjanvarma.com/?p=601#comment-3418 As a beginner of the financial concepts it is more useful. i have some basic knowledge of the time value of money. i thank ful to you for the nice presentation. As a beginner of the financial concepts it is more useful. i have some basic knowledge of the time value of money. i thank ful to you for the nice presentation.

]]> By: Personal Finance Notepad » Financial Planning Workshop http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-1060 Personal Finance Notepad » Financial Planning Workshop Mon, 27 Apr 2009 06:21:32 +0000 http://ranjanvarma.com/?p=601#comment-1060 [...] Playing with Numbers. Fear of Numbers [...] [...] Playing with Numbers. Fear of Numbers [...]

]]> By: Personal Finance Notepad » Why Do We Fear Numbers? http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-1058 Personal Finance Notepad » Why Do We Fear Numbers? Mon, 27 Apr 2009 06:09:20 +0000 http://ranjanvarma.com/?p=601#comment-1058 [...] to my RSS feed or by Email. Thanks for visiting!This post is in continuation of the topic: Doing the Maths. Googling for an answer to the above question, I found this close to what I thought. It’s [...] [...] to my RSS feed or by Email. Thanks for visiting!This post is in continuation of the topic: Doing the Maths. Googling for an answer to the above question, I found this close to what I thought. It’s [...]

]]> By: Ranjan http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-1038 Ranjan Sun, 26 Apr 2009 12:17:39 +0000 http://ranjanvarma.com/?p=601#comment-1038 <a href="http://www.jagoinvestor.com" rel="nofollow">Manish</a> mailed me with a few questions on the calculations in Option 1. He said, I would like to calculate it this way ... lets say the inflation is 5% , means some thing costing Rs X a year ago is now available at 1.05 * X Therefore . something which costs 1.05 X today , would have costed X a year before . ( I think you are mistaking it by , X today would have costed .95X a year ago ) Today -> X (this is what we want to find out) After 1 year -> 1.05 * X (this is 1,00,000 , which will i get from my friend after 1 year , so after 1 year i will buy some thing at 1,00,000 , and today I can buy that thing at X) . 1.05 * X = 1,00,000 X = 1,00,000/1.05 = 95,238 My response to him: You're right. But I am talking of Rs 1lakh today (Not X a year ago). The Rs 1 lakh after one year has been discounted at 5% to calculate the PV of Rs 1 Lakh next year. There's the difference of assumptions. Otherwise the calculations are the same as you have pointed out. The example was for simplicity sake. If I did the calculations as per your assumptions, there would be need to explain it more. Do other readers have similar confusion? Manish mailed me with a few questions on the calculations in Option 1. He said,
I would like to calculate it this way … lets say the inflation is 5% , means some thing costing Rs X a year ago is now available at 1.05 * X

Therefore . something which costs 1.05 X today , would have costed X a year before . ( I think you are mistaking it by , X today would have costed .95X a year ago )

Today -> X (this is what we want to find out)
After 1 year -> 1.05 * X (this is 1,00,000 , which will i get from my friend after 1 year , so after 1 year i will buy some thing at 1,00,000 , and today I can buy that thing at X) .

1.05 * X = 1,00,000

X = 1,00,000/1.05 = 95,238

My response to him:
You’re right. But I am talking of Rs 1lakh today (Not X a year ago). The Rs 1 lakh after one year has been discounted at 5% to calculate the PV of Rs 1 Lakh next year. There’s the difference of assumptions. Otherwise the calculations are the same as you have pointed out.

The example was for simplicity sake. If I did the calculations as per your assumptions, there would be need to explain it more.

Do other readers have similar confusion?

]]> By: Time Value of Money http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-1008 Time Value of Money Sat, 25 Apr 2009 05:35:51 +0000 http://ranjanvarma.com/?p=601#comment-1008 [...] investment, today’s money value is not equal to the tomorrow’s money value.  This blog post explains it nicely with equation. As the blog states : Unfortunately much of financial [...] [...] investment, today’s money value is not equal to the tomorrow’s money value.  This blog post explains it nicely with equation. As the blog states : Unfortunately much of financial [...]

]]> By: Acai Berry http://ranjanvarma.com/time-value-of-money/comment-page-1/#comment-1005 Acai Berry Sat, 25 Apr 2009 00:43:41 +0000 http://ranjanvarma.com/?p=601#comment-1005 [...] Personal Finance Notepad » Doing the Maths: Time Value of Money [...] [...] Personal Finance Notepad » Doing the Maths: Time Value of Money [...]

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