17.1 Valuation tables notes

1. 17.1.1Amount of Re 1 and amount of Re 1 per annum: compound interest tables

   The Amount of Re 1 table tells you what one rupee invested today grows to after n years at compound interest, (1 + i)^n; the Amount of Re 1 per annum table tells you what one rupee saved at the end of every year grows to, [(1 + i)^n − 1] / i.

   Standard · 7 min · Read here
2. 17.1.2Present value of Re 1 and present value of an annuity

   The present value of Re 1 is the sum that must be invested today to grow to Re 1 after n years, 1/(1 + i)^n; the present value of Re 1 per annum is today's worth of a series of Re 1 payments, [1 − (1 + i)^−n]/i — which is the Years' Purchase.

   Standard · 6 min · Full course
3. 17.1.3Annual sinking fund and its coefficient

   The annual sinking fund (ASF) is the sum to set aside at the end of every year, at compound interest, so that it grows to Re 1 (or the capital to be recovered) in n years: s = i/[(1 + i)^n − 1].

   Standard · 6 min · Full course
4. 17.1.4Years' purchase: single rate, dual rate and in perpetuity

   Years' Purchase (YP) is the multiplier that turns a net annual income into a capital value — capital value = net income × YP — and it is worked out as 1/i in perpetuity, 1/(i + s) on a single rate and 1/(R + s) on a dual rate for a fixed term.

   Standard · 6 min · Full course
5. 17.1.5Valuation-table numericals: reversions, deferred values and leasehold interests

   A sum or income that arrives later is valued by deferring it with the PV of Re 1; a let freehold is valued as term + reversion, and a lease is valued by capitalising the lessee's profit rent for the unexpired term, usually at a dual-rate YP.

   Standard · 7 min · Full course

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