Saturday, March 10, 2007

Time Value of Money

Apple and Orange were at headquarters of a big company at Nariman Point, Mumbai's premier business district. Both were MBA students and had come to meet a manager in that company for some inputs on their project.

The meeting went well and Apple and Orange were gazing at skyscrapers at Nariman Point.

“One day I’ll become CEO of this company”, Apple exclaimed ambitiously. Then he asked curiously, “How much does the CEO of this company earn?”

“More than 4 crores (40 million) rupees per annum plus stock options plus bungalow plus Mercedes and many other perks”, Orange responded to the opportunity of showing his general knowledge.

“I won’t be happy with only Mercedes. Also I won’t travel in public airplanes. I’ll buy a private jet at company’s expense”, Apple said visualizing himself in the private jet.

“Yeah, we’ll earn big bucks”, Orange also shared the big dream.

It was time to reach home and both had to catch a local train, at CST station, around three kilometers from Nariman Point.

“We’ll go by cab, but I don’t have money now. Please pay for cab, I’ll pay you later”, Orange requested.

Apple checked his wallet, it was empty.

“We’ll walk to the station. We won’t get time to walk when we’ll have private jet and Mercedes”, Apple started walking.

Both wished for some money, few lakhs if not crores from their future.

-- Time Value of Money: A dollar today is worth more than a dollar tomorrow.

-- In India: 1 crore = 10 million = 100 lakhs.