Class notes C.A

Class 1: Introduction to Time Value of Money

 Understanding the concept of Time Value of Money (TVM)
 Importance of TVM in financial decision-making
 Key components: Present Value (PV), Future Value (FV), Interest
Rate (r), Time Period (n)

Class 2: Simple Interest (SI)

 Definition of Simple Interest
 Formula for Simple Interest: SI = P * r * t / 100
 Calculations of Simple Interest in various scenarios
DEFINATION OF SIMPLE INTERST AND DIFFRENCE BETWEEN SI and
CI:: Difference between Simple Interest and Compound Interest
Simple Interest (SI) is a method of calculating interest on a
principal amount (the original amount of money borrowed or
invested) over a fixed period. Unlike compound interest, which
takes into account both the principal and the accumulated
interest over time, simple interest only considers the original
principal amount.

The formula for calculating simple interest is:

Simple Interest (SI) = (Principal) * (Rate) * (Time) / 100

Where:

 Principal: The initial amount of money borrowed or invested (the
starting amount).
 Rate: The rate of interest (expressed as a percentage) per unit of
time (usually per year).
 Time: The time period for which the interest is calculated (usually
in years).

Here's an example to illustrate how simple interest works:

Suppose you lend $1,000 to a friend at an annual simple interest
rate of 5% for 3 years.

Principal (P) = $1,000 Rate (R) = 5% = 0.05 (decimal form) Time
(T) = 3 years

Using the simple interest formula: