Time value of money is different in different time periods. It may be due to inflation, uncertainty, opportunity cost and effect of tax etc. It is very important to understand accumulation of future values of our present

At the End of the Year Future Value with Simple Interest Rate (₹) Future Value with Compound Interest Rate (₹) 1 11,000 11,000 2 12,000 12,100 3 13,000 13,310 4 14,000 14,641 5 15,000 16,105 6 16,000 17,716 7 17,000 19,487 8 18,000 21,436 9 19,000 23,580 10 20,000 25,937 (a) Simple Interest Formula: A=P×(1+r×t) (b) Compound Interest Formula: A=P×(1+r)^t Where: A = Future Value P = Principal amount (Present investment) r = Interest rate per period (in decimal) t = Number of years Real Return = ( (1+r) / (1+i) ) - 1 where r = Rate of interest & i = Rate of Inflation Here Rate of Interest = 10% & Inflation Rate = 6% Real Return = ( (1+0.10) / (1+0.06) ) - 1 = 3.77%