ECONOMI TECHNIK WEEK 3&4

Time Value of Money

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Angga Sastra Wijaya – Kode Dosen SSJ
Teach Deck
2017/2018-2
Time Value Of Money Concept
 How much money do you have?
 is it the same if spent now?
 If money is saved, what is the value of money in 5 years later?
 What the difference, The concept of money value with the
amount of money?
Time Value of Money

 The amount of money whose value is affected by time, the value

of which is the same, but the nominal value may be different.

 The value of money changes with time changes.

Why are there changes?

 Inflation
 difference of concept

The difference in the concept of money value with the concept of

the amount of money.

The concept of the value of money interest system at the bank

The concept of the sum of money mathematical concepts

 What is Equivalence

• Costs & benefits occur in different time periods.

• Causes a different value

 Equivalence Method: a method for calculating the similarity or

equivalence of money values for different times.
Equivalence Methode

In the calculation of the equivalent required

data on the interest rate (rate of interest).

For example, a Mother saved money of 5

million, in 2014 at the Bank, then her
equivalence after a year later becomes:
5 million (t = 2015) = 5 million + (5 million (t
= 2014) * interest)
Interest (Bunga)
 A sum of money paid due to the use of the
money previously borrowed
 compensation from the decline in the value
of money during lending time so that the
interest rate is relatively equal to the decline
in value of money
 Ensure value is relatively stable and stable

Interest = Present amount owned- original Investement

Bunga= Jumlah utang sekarang- jumlah pinjaman semula
Rate of Interest

By definition:
The ratio of interest paid to
the parent (money) in a period
of time and is usually
expressed in percentage of the
parent
Rate of Interest
Rate of Interest =
x 100%

Contoh:
A student borrowed money in the Bank of 15 million in
2011, in 2014 the debt was recorded at 18 million, what
interest does the student pay? What is the rate of
interest?
Interest = Rp.18.000.000-15.000.000
= Rp. 3.000.000
Rate of Interest = Rp.1000.000 (per tahun) /
15.000.000 x 100 %
= 6,67%
Types of Interest

Simple Compound
interest interest

Based only on the original Not only the original

loan, the previous period loan but the initial debt
interest is not charged period is also included
Simple Interest
Tahun Pinjaman Bunga i=5% Pinjaman akhir periode
awal
1 200.000 5%x 200.000= 10.000 200.000+10.000=210.00
0
2 200.000 5%x 200.000= 10.000 210.000+10.000=220.00
0
3 200.000 5%x 200.000= 10.000 220.000+10.000=230.00
0
4 200.000 5%x 200.000= 10.000 230.000+10.000=240.00
0
Total bunga
=40.000
Formula untuk simple interest
Bunga= i x P x n
i=suku bunga, P = pinjaman semula
N= jumlah periode pinjaman
 Compound Interest
Tahun Pinjaman Bunga i=5% Pinjaman akhir periode
awal
1 200.000 5%x 200.000= 200.000+10.000=210.000
10.000

2 200.000 5%x 210.000= 210.000+10.500=220.500

10.500
3 200.000 5%x 220.500= 220.000+11.025=231.025
11.025
4 200.000 5%x 231.525= 231.525+11.576=243.101
11.576
Total bunga
=43.101
Compound interest is more widely used than simple
interest, further interest calculation uses compound
interest
FYI & Discussion

 In our banking, we recognize Flat and Floating interest rates.

 What is a Flat rate?
 What is a Floating Interest Rate?
 How does it apply in lending rates?
Cash Flow

 Data on the entry and exit money is calculated for each

specified period of time
 The cash flow time period is set in various interval units
 if the only meaningful money coming in (reception) is called
cash-in. Expenditure is called cash-out
3 Types of Cash Flow

Initial cash flow

cash flow that occurs before assets can be operated,

for example, initial investment.

Operation cash flow cash flows used for the

operation of assets, for example costs and revenues

Terminal cash flowcash flows that are at the end of

the operation, for example, residual value
 Grafis

Method of
preparation
cashflow
Tabel
Graphic Method
 Graphical provisions :

The horizontal axis presents the time (time,

notasi n)

The vertical axis represents cost and benefit

Cost or cost is indicated by a downward arrow

(minus sumbu Y)

Benefit is shown with up arrow (sumbu positif

Y)
Metode Grafis

All revenue /
Benefit revenue

Initial
Cost investment and
other costs

Operation maintenance
overhaul cost
cost cost
Metode Grafis

benefit
periode

cost
 Examples
 The Bread Company plans to purchase a production
machine worth 50 million idr. Which followed the
average operating cost of 10 million / period. As a
result of the machine use promises an average profit of
20 million idr/period.
 Besides, in the 5th period will be treated overhaul with
costs 12 million and after use 10 years can be sold 15
million, draw cash flow in the form of tables and graphs
cash-flow!
 Method table

cash flow
periode t
cash-out (-) (Idr) cash- in (+) (Idr)
0 50 Millions (idr)
1 10 Millions (idr) 20 Millions (idr)
2 10 Millions (idr) 20 Millions (idr)
3 10 Millions (idr) 20 Millions (idr)
4 10 Millions (idr) 20 Millions (idr)
5 10 + 12 = 22 Millions (idr) 20 Millions (idr)
...
15 Millions (idr)
10 10 Millions (idr)
+ 20 Millions (idr)
Graphical Method

S=15
Keuntungan = 20

0 1 2 3 4 5 ... ... 10

Operasional=10
I=100

OH=12
Method of Equivalence with compound interest

Single Cash Flow

payment gradient

Cash Flow
Annual
 Future
towards
Present

Single
payment

Present
towards
Future
Single Payment
Cash Flow Tunggal (single payment)

 F = P (1+i)n  F = P (F/P,i,n)

(1+i)n : single payment compound amount factor

 P = F (1+i)-n  P = F(P/F,i,n)
(1+i)-n : single payment present worth factor

F=....?

0 1 2 3 4 ... n-1 n

P Grafik Cash Flow

Single Payment
For Example

A pensioner preposes a pension fund of

Rp.150,000,000 in a Bank with an interest rate of
20% per annum. What is a retiree's deposit 5 years
later??
Diketahui:
P=Rp 150.000.000
I= 20% / Year
N= 5 Years
Questions : deposit 5 years later  F?
 F=?
i= 20%

0 1 2 3 4 5
tahun

P= Rp.150.000.000
 Baca tabel

Multiplier factor of = 2,488

So the amount of money that must be paid by the student is as big as :
F = P (F/P,i,n)
F= 150.000.000 (2,488)
F= Rp373.200.000
For Example

 A student wants to have money ammount

Rp.30.000.000 4 years later , to pay their Master
Degree tuition fee. How much money , that student
should paid now to the bank, if the rate of interest is
15% per year?
 Diketahui:
F= 30.000.000
I= 15% / Year
N= 4 Year
asked : money to be paid  P?
First Step

 The first step is to create a cash flow chart !

F=Rp.30.000.000
i= 15%

0 1 2 3 4
tahun

P=...?
Second Step

 The second step is to find the interest multiplier factor

 Multiplier factor of = 0,5718
So the amount of money that must be paid by the student is :

P= F(P/F,i,n)
P= 30.000.000 (0,5718)
P=Rp Rp17.154.000
Annuity

Annuity
Condition are
The cash flow in
• P is 1 period before
the company, a
the first A
nominal should • F coincides with the
be stabel & last A
similar • A starts at the end
of the first period
until the n- period
 Annual
towards
future

Future
towards
annual
Annual
payment Present
towards
annual

annual
towards
present
2. Cash Flow Annual

(1+ i)n - 1
F = A.  F = A(F/A,i,n)
i

(1+ i)n - 1
: uniform series compound amount factor
i

i
A = F.  A = F(A/F,i,n)
(1+ i)n - 1

i : uniform series sinking fund factor

(1+ i)n - 1

A1 A2 A3 A4 n
... ...

0 1 2 3 4 5 ... ... n

Annual Cash Flow

 i.(1+ i)n
A = P.  A = P(A/P,i,n)
(1+ i)n - 1

i.(1+ i)n
(1+ i)n - 1 : uniform series capital recovery factor

(1+ i)n - 1
P = A.  P = A(P/A,i,n)
i.(1+ i)n

(1+ i)n - 1
: uniform series present worth factor
i.(1+ i)n
Question

A manufacture employee had a Rp.1.000.000

to be deposited in a bank every month. If
interest at the bank is 2%, calculate the
manufacture employee's money in the bank
after 3 years
A= Rp.1.000.000
N= 3 tahun= 36 bulan
I=2 %
Question : F ?
 A= 1.000.000

... ...

0 1 2 3 4 5 ... ... n
i=2%
F...?

 Faktor pengali untuk i= 2% sebesar

51.994
 F= A(F/A, i, n)
 F=1.000.000 x 51.994
 F= 51.994.000
 G

G
A
...

0 1 2 3 4 ...

Pola Cash Flow

Arithmatic Gradient g=%

0 1 2 3 4 ...

Pola Cash Flow

Geometric Gradient
3. a) Cash Flow Arithmetic Gradient

(1+ i)n - 1
F=G/i. -n
i

(1+ i)n – in – 1
P=G.  P = G(P/G,i,n)
i2.(1+ i)n

(1+ i)n – in – 1
: Arithmatic Gradient present worth factor
i2.(1+ i)n

A=G. (1+ i)n – in – 1  A = G(A/G,i,n)

i(1+ i)n – i

(1+ i)n – in – 1
i(1+ i)n – i
: Arithmatic Gradient uniform series factor
3. b) Cash Flow Geometric Gradient

1-(1+ g)n.(1+ i)-n

P=A1. Dimana i tidak sama dgn g
1- g
 (n-1)G
G 3G
G
G A1 A2 A3 A4 An 2G
A 1G
= +
1 2 3 4 n 1 2 3 4 n 1 2 3 4 n
0 0 0

F F1 F2
Cash flow annual Standard annual Standard Gradient

 Menggunakan 2 perhitungan yaitu standar gradient dan

standar annual
 Dan berlaku sebaliknya.
 Must Know!!

Arithmatic gradien besaran turun/naik stabil

(dlm mata uang)

Arithmatic gradien ≠ Geometric gradien

 Jika i = g, maka
𝑛 Dalam
 𝑃 = 𝐴1 . prosentase
(1+𝑖)
boleh
Example

 A shoe Company in Cibaduyut well managed

to sell its shoe products for Rp.300.000.000
per year. The Owner wants an annual
increase of 50 million by intensifying
marketing. If interest rates are 12% on
average per year
 Please Count:
 The value of its futuristic equivalent (F)
 The present equivalent value
Diketahui:
 A = 300 juta
 G=50 juta
 I= 12%
Ditanyakan : F? dan P?
Jawab G = 50 juta

A= 300 juta
...

n= 12
0 1 2 3 4 ...
i=12%

F?
 F=

untuk mencari hubungan future dan cashflow gradient

 F=

untuk mencari hubungan future dengan annual.

(bisa dicari di tabel F = A(F/A,i,n))

P?

G = 50 juta

A= 300 juta
...

n= 12
0 1 2 3 4 ...
i=12%
P?
 P= G(P/G, i, n) + A(P/A,i,n)

(kedua-duanya bsia dicari di tabel bunga)

P= 50 (25.952) + 300 (6.194)

P= 1297,6 + 1858,2
P= 3155,8
CONTOH SOAL GEOMETRIC GRADIENT

 A company makes an revenue per year 11% increase of

principal amount of Rp. 20,000,000, - at the beginning of the
first year. Determine the Present equivalent value, if
acceptance is made within 6 years and the interest rate is
11%?

 Gambar dulu CF!

 i=g, maka:
6
𝑃= 𝑅𝑝. 20.000.000. = Rp. 10.000.000,-
(1+11)
Cont’

 Bila i = 10%, maka:

 i≠g
1− 1+0,1 6 .(1+0,11)−6
 P = Rp. 20.000.000
0,11−0,1

 P= Rp. 20.000.000 (5,315)

 P= Rp. 106.302.159