I am using PC Tulsian book for Financial reporting (CA final). I like to know how PVF is calculated for IRS. This problem is given in their book page 8B 10
PVF on the basis of discount factor.
0.95681877, 0.91909895, 0.88486358.
I am not able to understand how the above figures are arrived.
With Regards
Swaminathan
PVF or Present Value Factor is Calculated as (1+r)^-n or 1/(1+r)^n.
wher r is rate of interest and n is number of periods.
^ sign is for power i.e., 2^2=4 or 5^2=25
Agree with Aakash above.
For solving sums, do 1/(1+Interest Rate%) on calculator.
ex. if interest rate is 10%, do "1/1.10" for 1st year. that will give you PVF as 0.909
and afterwords just keep pressing "=" for subsequents years PVF. which will give you 0.826 for 2nd year, 0.757 for 3rd year and so on
PVF on the basis of discount factor. 0.95681877, 0.91909895, 0.88486358.
=1/0.95681877
=104.51311676194953333325669038104-100
=4.5131% discounting factor
I agree with P Y S V S VARMA.
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