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Professional Finance Qualifications · Introductory lesson · English · 2:00
Follow the classroom example from the value of money today to annual compounding, the difference from simple interest, and discounting a future amount to its present value.
An introductory lesson shared across ACCA, actuarial, CFA, CFP and FRM preparation. Continue with your selected programme for its full curriculum and published lessons.
Browse the matching finance programmes ↓Follow the on-screen worked examples and use the calculations below to review each step.
The examples assume a 10% annual rate and annual compounding. This rate is an illustration for the calculation.
Compounding calculates interest on the original amount plus accumulated interest. Discounting finds today’s equivalent of a future amount using the stated rate and period.
Year 1 interest: ₹10,000 × 10% = ₹1,000.
Year 1 balance: ₹10,000 + ₹1,000 = ₹11,000.
Year 2 interest: ₹11,000 × 10% = ₹1,100.
Year 2 balance: ₹11,000 + ₹1,100 = ₹12,100.
Simple-interest balance: ₹10,000 + ₹1,000 + ₹1,000 = ₹12,000.
Difference: ₹12,100 − ₹12,000 = ₹100 of interest on interest.
FV = PV × (1 + r)n
₹10,000 × (1.10)2 = ₹12,100.
PV = FV ÷ (1 + r)n
₹12,100 ÷ (1.10)2 = ₹10,000.
Second example: ₹5,000 × (1.10)2 = ₹6,050.
PV is present value; FV is future value; r is the rate per period as a decimal; n is the number of periods. Match the rate and the period.
Professional qualifications and examinations remain governed by their respective bodies; this programme provides independent preparation support.
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Professional Qualifications / Professional Finance Qualifications
Independent preparation support for ACCA Complete Learning Support, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for Actuarial Science Foundation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for CFA Level I Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for CFA Level II Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for CFA Level III Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for CFP Certification Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for CIMA Professional Qualification Preparation, with original study notes, practice and revision. Official certification, eligibility, validity and examination rules remain governed by the relevant authority.
Professional Qualifications / Professional Finance Qualifications
Independent preparation support for FRM Part I Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for FRM Part II Preparation, with original study notes, practice and revision. Certification/qualification requirements remain governed by the relevant professional body.
Watch the time-value-of-money lesson · 2:00 →Professional Qualifications / Professional Finance Qualifications
Independent preparation support for US CMA Preparation, with original study notes, practice and revision. Official certification, eligibility, validity and examination rules remain governed by the relevant authority.
Professional Qualifications / Professional Finance Qualifications
Independent preparation support for US CPA Preparation, with original study notes, practice and revision. Official certification, eligibility, validity and examination rules remain governed by the relevant authority.
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Watch the Professional Finance Qualifications introductory video · 2:00 ↑
Academic and professional-examination programmes provide learning support. The underlying degree, examination eligibility or professional qualification is governed by the relevant institution or examining body. Review the terms and refund policy before payment.
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