Swaminathan Sundaram (Student CA Final ) (26 Points)
19 September 2015I 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
Aakash
(Article Assistant under CA firm)
(65 Points)
Replied 19 September 2015
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
Anup A Deshpande
(Freelancer)
(77 Points)
Replied 21 September 2015
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
CMA P Y S V S VARMA
(cost accountant)
(173 Points)
Replied 22 September 2015
PVF on the basis of discount factor. 0.95681877, 0.91909895, 0.88486358.
=1/0.95681877
=104.51311676194953333325669038104-100
=4.5131% discounting factor
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