Abstract

The case study covers the dilemma of Aarvi Mehra (Aarvi), a new management trainee, who had been given the responsibility of all financial calculation-related work by her immediate boss, Ryan Pratap Pandey (Ryan). The financial calculations were to be used by the CFO’s office in their presentation to the CFO. Aarvi had to complete all the present value (PV) and future value (FV) related calculations first before working on other calculations and had been given one day to complete all these calculations. The case helps students understand the time value of money (TVM) concepts with the help of eleven scenarios covering Lump Sum PV payment, Lump Sum FV payment, PV of Ordinary Annuity, FV of Ordinary Annuity, PV of Annuity Due, FV of Annuity Due, PV of Growing Annuity, FV of Growing Annuity, PV of Uneven Cash Flows, FV of Uneven Cash Flow, and Annualize interest rate.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To interpret the various concepts related to the time value of money
• To estimate the present value and future value of the various scenarios related to the time value of money concepts
• To build a strong foundation for the basic concepts of Finance

Keywords

Financial Management; Time Value of Money; TVM; PV; FV; Present Value; Future Value; Lumpsum Payment; Annualize Interest Rate; Uneven Cash Flows; Growing Annuity; Annuity Due; Ordinary Annuity