The worked question on this page is original educational practice. It is not represented as a question from an official previous-year examination paper.
01 / UNDERSTANDING
Review the question
Create an original present-value question and verify it by compounding the answer forward. When reviewing an authentic paper, check whether timing is at the beginning or end of each stated period. Move the same future receipt to a later date without changing the assumed periodic rate. Ask how present value changes and why. The answer should use the longer discount interval, while keeping all example rates clearly hypothetical and avoiding a claim about an actual investment's promised return.
02 / UNDERSTANDING
The concept in context
The discount rate and cash-flow timing must use compatible periods. A calculated present value is conditional on the assumptions, not a promised market price. Comparing projects also needs attention to cash-flow reliability and other relevant differences, rather than treating the formula as a substitute for business judgment.
03 / UNDERSTANDING
A worked learning case
A classroom problem compares ₹1,100 received in one year with money available now, assuming a ten per cent annual discount rate. The present value is ₹1,000. The example isolates time value and makes no claim that ten per cent is a current investment return or the correct rate for every project.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
What is the present value of ₹1,100 due in one year at an assumed annual discount rate of ten per cent?
Show the answer and reasoning
₹1,000.
Divide ₹1,100 by 1.10 to obtain ₹1,000. Under the exercise's assumptions, ₹1,000 today grows to the same future amount at that rate. The result depends on the specified timing and discount assumption; it should not be presented as a guaranteed investment outcome or universal valuation rate.
Two traps to watch for.
- Multiplying when the question requires discounting a future receipt.
- Using an annual rate with unconverted monthly periods.
YOUR TOPIC-SPECIFIC LEARNING MAP
Learn from the attempt
Mark today and the future receipt on a timeline.
Match the discount-rate period with the cash-flow period.
Reverse the calculation to check the future-value relationship.
Explain the idea, apply it to a new situation, then check what changed in your reasoning.
BANKERS TUTORIAL · SOURCE NOTES
Keep the source alongside your notes.
Official links provide subject context and authoritative reference material. This guide’s explanation, scenario and question are original Bankers Tutorial learning content.
- iibf.org.in https://iibf.org.in/jaiib-junior-associate-IIBF
- iibf.org.in https://iibf.org.in/documents/RulesSyllabus/2026/FlagshipCourses/21%20-%20JAIIB-Final_Exam_24.07.25_Final_23.02.2026.pdf
- www.rbi.org.in https://www.rbi.org.in/commonperson/English/Scripts/PressReleases.aspx?Id=2123
For JAIIB preparation, check the current official notice before relying on changing dates, rules or examination requirements.
