Time Value of Money

Money received today is more valuable than the same amount of money a year from now. It is important to understand the relation of money and time since the value of money is affected by time through Inflation and Loss of Opportunity. Money loses it purchasing power over time due to inflation. As prices rises the same amount of money today won't be able to purchase the same number of goods a year from now. Another way you lose money over time is through loss of opportunity. Money that should have been received a year ago could have earned if it were invested a year ago.

In order to determine the value of money over time we will use the formula below.

PV = Present Value
FV = Future Value
IR  = Interest Rate
N   = Number of Years

PV = FV / (1+IR)N

Philippine UITF and Mutual Fund Performance July 2016



How much do you really earn?

A lot of people mistake their net take home pay as the amount they are actually earning. Most don't take into account the job related expenses they make. Your real earnings can be determined by deducting the job related expenses to your net take home pay. Transportation and meals are the typical expenses you spend every time you report to work. Other jobs might require you to spend regularly on clothes or require you to make several cellphone calls in a month.

Deducting these expenses from your net take home pay will provide you with a more realistic figure on your actual earnings. This figure is known as your net spendable income. After computing your monthly net spendable income we need to convert it to annual net spendable income in order to add your thirteenth month and all bonuses you received for the whole year.

Gross Salary= Basic Salary + Allowance
Net Salary= Gross Salary - Standard Deductions
= Gross Salary - Tax - SSS - Philhealth - Pagibig
Net Monthly Spendable Income= Net Salary - Job Related Expenses
Net Annual Spendable Income= (Net Monthly Spendable Income x 12) + 13th Month + Bonuses

Philippine Inflation Rate (1957-2014)



Note:
1. Price Increase Per Administration - How much has the prices of goods change within a specific administration. We use a  base price of Php 100 at the beginning of each administration. We then compute how much the prices of  goods has increased at the end of each administration.
2.Purchasing Power - This determines how much the purchasing power of money has reduced each administration. If the purchasing power of money has  reduced to 50% after 10 years, then Php 100 worth of goods purchased 10 years earlier can only purchase Php 50 worth of goods today.

Source: http://data.worldbank.org/


Vista Land & Lifescapes Inc. (VLL)

SYMBOL VLL

PRICE 6.80

ANALYST CONSENSUS BUFFETT BOOKS CALCULATOR
FAIR VALUE 7.20 Intrinsic Value 17.76




FINANCIAL TIMES GURU FOCUS
Low 6.15 Graham Number 9.41
Median 7.15 DCF Calculator 9.59
High 7.50




PER SHARE
RATIOS
Earnings Per Share 0.65 P/E 10.46
Sales Per Share 2.56 P/S 2.66
Book Value Per Share 6.06 P/B 1.12
Free Cash Flow Per Share 0.2 P/FCF 34.00