Calculation of Annual Installment:
To calculate the annual installment, we need to determine the present value of the loan amount, which is Rs 10,000. The formula to calculate the present value is:

Present Value = Future Value / (1 + r)^n

Where:
Future Value = Rs 10,000
r = Interest rate per period = 5% = 0.05
n = Number of periods = Unknown

By substituting the given values in the formula, we can solve for n:

10,000 = 1,000 / (1 + 0.05)^n

Simplifying the equation further:

(1 + 0.05)^n = 10,000 / 1,000
1.05^n = 10

Taking the logarithm of both sides, we can solve for n:

n * log(1.05) = log(10)
n = log(10) / log(1.05)
n ≈ 14.206

Therefore, the number of years required to repay the debt is approximately 14.206 years.

Explanation:
To explain the concept of the time value of money, we need to understand the basic principle that money today is worth more than the same amount of money in the future. This is because money has the potential to earn interest or generate returns over time.

In this scenario, the company borrowed Rs 10,000 and agreed to repay it with compound interest at a rate of 5% per annum. The company will make annual installments of Rs 1,000 to repay the debt.

To determine the number of years required to clear the debt, we need to calculate the present value of the loan amount using the formula mentioned above. The present value represents the current worth of the future cash flows.

By rearranging the formula and solving for n, we find that the number of periods required to repay the loan is approximately 14.206 years.

This means that the company will need approximately 14.206 years to make annual installments of Rs 1,000 to fully repay the loan of Rs 10,000, considering the compound interest of 5% per annum.

It is important to understand the time value of money concept as it helps individuals and businesses make informed financial decisions by considering the impact of inflation, interest rates, and the timing of cash flows.