5. Time Value Of Money - Introduction from Financial Management Subject — Transcript

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1. 0:01hello dear students in financial
2. 0:03management one of the important topic
3. 0:06time value for money
4. 0:07so this concept we are going to discuss
5. 0:10and uh I'll give you general knowledge
6. 0:13also not only bookish knowledge so that
7. 0:16it will be useful for you practically
8. 0:17when you go to any higher post
9. 0:20and when you are in finance field
10. 0:23so in any immenses it will be useful for
11. 0:25you in that way I'll give you the
12. 0:27explanation time value for money
13. 0:30the concept if you see concept of Time
14. 0:33Value Harmony value of money
15. 0:36value of money changes according to the
16. 0:39time
17. 0:40value of money changes according to the
18. 0:43time that is why we say it as a time
19. 0:44value for money okay time value fun this
20. 0:47concept in simple one sentence we can
21. 0:49say current money is more valuable than
22. 0:52the future
23. 0:54current money is more valuable than the
24. 0:57future I'll explain it so the same
25. 1:00concept we call it as a timer preference
26. 1:02for money
27. 1:04current money is more valuable say for
28. 1:07example I'm having right now one lakh
29. 1:09rupee
30. 1:10one lakh rupee I'm having and this one
31. 1:14lakh rupee value whatever I'm having at
32. 1:17present
33. 1:182023
34. 1:20with one lakh I can buy a TV
35. 1:23refrigerator
36. 1:26mixi some items I can buy it the same
37. 1:30one lakh worth of rupees after 10 years
38. 1:36will it be the same value
39. 1:38no
40. 1:40value will be increasing
41. 1:42at present with one lakh rupee as I said
42. 1:45I can buy TV refrigerator and also Mixie
43. 1:50etc etc I can buy okay I have a list
44. 1:53wish list that I can do it I can fulfill
45. 1:55it with one lakh rupee at present but
46. 1:57after 10 years with the same 1 lakh
47. 1:59rupee
48. 2:01all these items I may not get
49. 2:04so that is why we say that current money
50. 2:07is more valuable this is more valuable
51. 2:10than the future in future after 10 years
52. 2:14after five years one lakh value will be
53. 2:17always less
54. 2:18why
55. 2:19inflation
56. 2:21always value money value will be
57. 2:23decreasing and the prices are increasing
58. 2:26and of course always are also increasing
59. 2:29so this concept we say it as a concept
60. 2:31of time value of money in this concept
61. 2:34we are going to discuss uh at present
62. 2:36suppose say uh I have as I said one lakh
63. 2:40rupee
64. 2:44this is at present
65. 2:46and in future
66. 2:50it can be five years or ten years
67. 2:52whatever period you want you can so in
68. 2:55future how much it will be
69. 2:5910 years
70. 3:0110 years how much it will be so this is
71. 3:04one concept
72. 3:07first concept
73. 3:08and another concept what we are going to
74. 3:10discuss is uh after 10 years
75. 3:15after 10 years
76. 3:17you are going to get 10 lakh Rupees
77. 3:22after 10 years you are going to get 10
78. 3:24lakh Rupees
79. 3:25but right now what is the value of the
80. 3:27standard rupees in 2023 what is the
81. 3:30value of 10 lakh Rupees how much is this
82. 3:34Turlock is after 10 years but present
83. 3:37what
84. 3:38so this is another concept
85. 3:42first concept
86. 3:44and second concept
87. 3:47present value we know present value one
88. 3:49lakh rupee future value we don't know
89. 3:51future after 10 years how much will be
90. 3:53the value we don't know
91. 3:55one concept another concept is present I
92. 3:58don't know what is the value but in
93. 4:00future after 10 years the value will be
94. 4:0210 lakh Rupees
95. 4:04rupees
96. 4:09future after 10 years he wanted to give
97. 4:1110 lakh Rupees but right now what is the
98. 4:13value of that
99. 4:15right so these are the two concepts
100. 4:18mainly we are going to discuss in the
101. 4:20concept of time value of money time
102. 4:22value of money why this time value of
103. 4:25money we have to calculate why we have
104. 4:27to learn this there are mainly four
105. 4:29results are there so reasons for time
106. 4:32value of money the first reason is that
107. 4:34very important you will understand the
108. 4:36concept then in the next two classes it
109. 4:38will be easy for us to go for the
110. 4:39practicals okay
111. 4:41so reasons for time value of money first
112. 4:43thing is that risk and uncertainty
113. 4:46risk and uncertainty present value is
114. 4:49something future who knows
115. 4:52future it may increase it may decrease
116. 4:54that is why we say future is risk and
117. 4:57there is uncertainty also value will be
118. 5:00increasing or decreasing definitely it
119. 5:02will decrease but how much it decreases
120. 5:04we don't know
121. 5:06so that is why we have to calculate so
122. 5:09when we calculate this time value of
123. 5:12money so that makes difference on the
124. 5:14calculation of money and also when we
125. 5:18buy assets like fixed assets land the
126. 5:21buildings anything if you buy so there
127. 5:23also it makes difference that right now
128. 5:25I am purchasing a building
129. 5:27cost of Phi crore
130. 5:29future after 10 years what will be the
131. 5:32value so that calculation also you can
132. 5:34do it
133. 5:35are you getting it so that is why not
134. 5:38only the cash and any kind of immovable
135. 5:41assets anything the value at present
136. 5:43what we are having future what it will
137. 5:45be so that is also risk and uncertainty
138. 5:48is the main important factor for
139. 5:50calculation of present value of money
140. 5:52now here risk and uncertainty you can
141. 5:56discuss about two points influence and
142. 5:57outflows cash inflow cash outflow
143. 6:01cash outflow is in our hands to some
144. 6:04extent
145. 6:05cash outflow means we are making payment
146. 6:07to the uh maybe creditors we are making
147. 6:10payment or we are buying some Goods and
148. 6:13we are investing somewhere like payments
149. 6:16daily by wages we are paying operating
150. 6:19expenses we are paying so all this cash
151. 6:21inflows to some extent it's in our hands
152. 6:24but whereas sorry cash outflows to some
153. 6:29extent it is in our hands
154. 6:32but influence
155. 6:34it may not be it depends on the
156. 6:37situation sometimes we may get profits
157. 6:40sometimes we may not every time we get
158. 6:42profits but this time we could not
159. 6:43because of the recession because of
160. 6:46market conditions because of the
161. 6:48inflation any reason what whatever it
162. 6:51may be the reason so that is why inflow
163. 6:53outflows based on that will have the
164. 6:56risk and uncertainty so that is the main
165. 6:58reason will be calculated then time
166. 7:00value of money are you getting it second
167. 7:03thing is that preference for consumption
168. 7:05consumption who wanted to consume it now
169. 7:08consumption
170. 7:09right now many people will give the
171. 7:12preference
172. 7:13because
173. 7:15present and future if you see present is
174. 7:17important for me
175. 7:19future is not much because you who knows
176. 7:22what's going to happen in future
177. 7:23somebody says that I'll give you a one
178. 7:26lakh rupee right now
179. 7:28shall I give you now or after two years
180. 7:30after six months what do you say you'll
181. 7:34say right now
182. 7:36that is called as preferences preference
183. 7:39of consumption I want to consume it now
184. 7:42only
185. 7:43so this is also one of the main reason
186. 7:46so that's about the present and future
187. 7:48future is not certain that is the reason
188. 7:50present we are we wanted to take the
189. 7:53money we want to consume it present we
190. 7:55wanted to expand it
191. 7:57anything is whatever you want to do
192. 7:59present is important at this concept so
193. 8:02that present also you will be
194. 8:03calculating in time value of money
195. 8:05an extra one is that next reason
196. 8:07investment opportunities
197. 8:10investment opportunities means generally
198. 8:12uh when you have excess money when you
199. 8:15wanted to invest something and when you
200. 8:17wanted to save money definitely will go
201. 8:20for investment when we invest it this
202. 8:23concept is important time value for
203. 8:25money I'm investing right now how much
204. 8:27I'm investing suppose
205. 8:31one crore I'm investing what about the
206. 8:34value of one crore after some time how
207. 8:36many years I'm investing am I investing
208. 8:38for one year
209. 8:40Miss short-term period I'm investing for
210. 8:43three years I'm Investing For Five Years
211. 8:45I'm investing for 10 years like how many
212. 8:48years you are investing whatever may be
213. 8:51the period you are investing
214. 8:53your return
215. 8:54how much return you are going to what
216. 8:56will be the value of that money after
217. 8:58that certain period or after one year
218. 9:00after three or after five year after ten
219. 9:01years what will be the value that
220. 9:03investment point of view also we should
221. 9:05know time value of money
222. 9:07if it is clear then you will invest
223. 9:09accordingly
224. 9:10you will decide whether it is good or
225. 9:12bad
226. 9:13how much I have to invest now according
227. 9:15to the income if you see the income at
228. 9:17after three years satisfactory then one
229. 9:20query wanted to not satisfactory less
230. 9:23more good then maybe you may invest more
231. 9:27than one crore also
232. 9:29so that is why very important thing is
233. 9:31that investment opportunities
234. 9:33because future expectation this
235. 9:35investment opportunities are based on
236. 9:37the future expectations future you are
237. 9:39expecting after so and so period I
238. 9:41wanted to get so and so money but that
239. 9:43value of money after that period what it
240. 9:45will be you know that LIC companies and
241. 9:48bankers all these people their
242. 9:50strategies that uh right now every year
243. 9:53you have to pay this this amount every
244. 9:55month you have to pay after 10 years
245. 9:56after 20 years after your retirement
246. 9:58you're going to get so and so money so
247. 10:00they'll be saying that right
248. 10:01so whenever you hear that don't get
249. 10:04tempted
250. 10:06calculation time value of money
251. 10:07calculation you must know then it will
252. 10:10be easy and last point is that
253. 10:12inflammatory economy inflammatory
254. 10:14economies uh inflation is quite common
255. 10:17especially in our country India
256. 10:19inflammation uh that is inflation
257. 10:22inflation means cost or the prices will
258. 10:25be always increasing slowly inflation
259. 10:29sometimes maybe rapidly also
260. 10:32when uh inflammatory economy or
261. 10:35inflation is more in our country then
262. 10:37automatically you need to know time
263. 10:38value of money also somebody is paying
264. 10:41something you are somebody wanted to pay
265. 10:42you something after some period Then
266. 10:45it was no inflation what are according
267. 10:48to the inflation what is the price
268. 10:50so that is why these are the main four
269. 10:53Concepts that makes you to need to
270. 10:56understand that makes you to uh make it
271. 10:59very clear that you must know the time
272. 11:01value of money
273. 11:03are you getting it so mainly you have to
274. 11:05remember this concept time value of
275. 11:06money present you have one lakh rupee
276. 11:09future how much it will be after five
277. 11:10years after 10 years whatever it may be
278. 11:12the period you are expecting and in the
279. 11:14same way after 10 years you are going to
280. 11:16get 10 lakh rupee right now how much it
281. 11:17is
282. 11:19are you getting it anyway in the coming
283. 11:21class time value of money if you
284. 11:23understand what is time value of money
285. 11:25the techniques which are used in time
286. 11:27value of money that will discuss in
287. 11:29depth you have to stay connected you
288. 11:31have to focus
289. 11:33and whenever you come to my class you
290. 11:35need to concentrate
291. 11:38are you getting it check out the
292. 11:40playlist there are many subjects which
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294. 11:43mbscs CMA or CS become BBA LLB whatever
295. 11:48may be the course even btech calls it
296. 11:50will be useful don't forget to share
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298. 11:54and energy to prepare all this video
299. 11:56especially for you all at the rate free
300. 11:58of cost stay connected and have a bright
301. 12:02career good luck