Topic for Discussion: “Present Value and Discounting?”
Few days ago, the State Bank of Pakistan (SBP) has raised interest rate up to 9.5 percent from 9.0 percent, in line with requirements set by the International Monetary Fund. This increase was in a need to curtail rising inflation by tightening the flow of liquidity through higher interest rate. You were planning to purchase an insurance policy. What will be the effect of this rise in interest rate on:
a) Present value of insurance policy
b) Future value of insurance policy
M saqib khan... the key is 100 rupees in your hand are worth more than 100 rupees after 1 year... because we should keep it in mind that inflation will also increase.. so future value of money is less than present value of money.
but listen hum nay ya both formula use karein hn k nae ??
Ye present value ke liye formula ha PV = FV/(1+r)n Ye future value ke liye FV =PV*(1+r)n ???
i think nothing going to clear.
ma to bhot he confuse ho gay.
kaya hum ans theory ma da ya mathematic ma b satha?
kasy ???? kea khuch b nae mathematic mn example dani ??? seda seda theory mn danay say to clear nae ho raha na :(
ainy butt here in our situation we are discusing the value of insurance policy and insurance policy is a kind of investment. money in hand and money invested in some ware is different thing. money in hand loses value with the time but money invested will be increased. try to understand the concept.
Friends.. we dont need to calculate anything here. we just need to tell that which value will be increased and which will be decreased and what is the reason behind it.
thanks dude for clearing the point......
read carefully and digest this line you'll definitely find the answer
This increase was in a need to curtail rising inflation by tightening the flow of liquidity through higher interest rate.
you just need to give arguments, nothing more
i agreed @M saqib khan
Koe btae phr final kya kry :(