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A Model of the Net Present Value of “Zero-Interest” Instalment Schemes

Author

Listed:
  • Mihir Dash

    (Alliance University, India)

  • Teja Motukuri

    (ICICI Bank, India)

Abstract

This study proposes a model for ‘zero-interest’ instalment schemes in terms of the net present value for the financial institutions and for the consumers. The proposed model is especially of use for the consumers, allowing them to assess the affordability of the scheme in terms of the amount of down-payment that they have to immediately pay, the period over which they can spread the payments, and their resultant savings. The model also suggests a simple process for financing institutions and consumers to select a scheme to optimise their respective net present values.

Suggested Citation

  • Mihir Dash & Teja Motukuri, 2018. "A Model of the Net Present Value of “Zero-Interest” Instalment Schemes," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 7(4), pages 179-184, November.
    • Handle: RePEc:ods:journl:v:7:y:2018:i:4:p:179-184
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    References listed on IDEAS

    as
    1. Alexander G. Yankovoy & Nadezhda V. Melnik, 2012. "Modified Internal Rate Of Return Of The Investment Project," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 1(4), pages 502-508.
    2. Anatoliy G. Goncharuk, 2012. "Applied Aspects Of Investment Decision Making," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 1(4), pages 469-475.
    3. Anatoliy G. Goncharuk, 2015. "Application of the Investment Theory in Research and Practice," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 4(2), pages 119-126.
    4. Alexander G. Yankovoy, 2012. "An analysis of dependence of the NPV of investment project from the price of invested capital," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 1(2), pages 294-303.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Dash, M. & Motukuri, T., 2019. "A Game-Theoretic Model for “Zero-Interest” Instalment Schemes," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 8(1), pages 1-5, February.

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    More about this item

    Keywords

    ‘zero-interest’ instalment schemes; net present value; optimisation;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables

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