Corporate Fin Mgt NDLM.PDF

1.19. If we use SPPWF table from 1st to 10th year and 15 % Discount Factor, it
will appear as:

I Year

0.8696

II Year

0.756 1

III Year

0.6575

IV Year

0.5718

V Year

0.4972

VI Year

0.4323

VII Year

0.3759

VIII Year

0.3269

IX Year

0.2843

X Year

0.2472

Rs.5.0188

1.20. In this example the return is Rs.10, 000 for each year: i.e. the return is
constant for each year. By using SPPWF tables we undoubtedly arrived at
the figure of Rs 5.0188. But it is a time consuming process.

1.21. Instead if we refer to the USPWF table and look at the 10th year of 15 % D.F.
column, we will find the figure of Rs 5.0188. This is the same figure that we
got by adding the figures from 1st to 10th year in the 15% of column of
SPPWF table. But we saved considerable time required for calculation.

1.22. To calculate the PV of Rs.10, 000 at the end of each year over 10 years
multiply.

Rs.10, 000 X 5.01 88

= Rs.50, 188

In other words, the PV of Rs.1, 00,000 is Rs.50, 188.

1.23. Consider the following example, where the

• Cost of equipment A is Rs.19,00,000