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Notes/CA Foundation/Quantitative Aptitude (Maths, LR, Stats)

CA Foundation · Quantitative Aptitude (Maths, LR, Stats)

Time Value of Money

Chapter 3 · 6 formulas · 4 exam-critical pointers

Core concepts

  1. 01₹1 today > ₹1 tomorrow — due to earning capacity, inflation, risk.
  2. 02Simple Interest: interest on principal only.
  3. 03Compound Interest: interest on principal + accumulated interest.
  4. 04Annuity: equal periodic payments — ordinary (end) or due (beginning).
  5. 05Effective rate accounts for compounding within the year.

Flowchart summary

Present Value <-- Discounting <-- Future Value | ^ v | Annuity FV/PV Compounded (n times/yr)

Exam-critical pointers

  • ⭐Annuity due = ordinary annuity × (1 + i).
  • ⭐Perpetuity PV = A / i (no time limit).
  • ⭐Doubling: by Rule of 72 → years ≈ 72/r (only for CI).
  • ⭐Use log tables when n is large in CI — ICAI calculators not allowed.

Make it click

Formula sheet

  • SI = (P × R × T) / 100
  • CI: A = P(1 + r/100)ⁿ
  • PV = FV / (1 + r)ⁿ
  • FV of Annuity (ordinary) = A × [((1+i)ⁿ − 1) / i]
  • PV of Annuity (ordinary) = A × [(1 − (1+i)⁻ⁿ) / i]
  • Effective Rate = (1 + r/m)ᵐ − 1

More from Quantitative Aptitude (Maths, LR, Stats)

  1. Ch 1Ratio, Proportion, Indices and Logarithms
  2. Ch 2Permutations and Combinations
  3. Ch 4Measures of Central Tendency & Dispersion
  4. Ch 5Correlation and Regression
All CA Foundation notes →
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