Ch 3 · Time Value of Money

5 concept points · 6 formulas · 4 exam-critical points.

📘 Core concepts

• 1₹1 today > ₹1 tomorrow — due to earning capacity, inflation, risk.
• 2Simple Interest: interest on principal only.
• 3Compound Interest: interest on principal + accumulated interest.
• 4Annuity: equal periodic payments — ordinary (end) or due (beginning).
• 5Effective rate accounts for compounding within the year.