Present value

Present value.

That was the present value of the 20 today, plus 50 in one year, divided by that, discounted to the present day.

What's the present value?

Discounted twice.

To get its present value.

And if you know the present value then it's very easy to understand the net present value and the discounted cash flow and the internal rate of return and we'll eventually learn all of those things.

Actually I meant to present value it.

But did I present value these numbers?

Present value of 100 today is 100.

And you can watch the present value video.

What is the present value of the 110?

But the present value, what does that mean?

And this is where present value comes in.

We still don't know what present value is.

And then we will get the present value

Let's see, so the present value of the 20 payment is 20, plus the present value of the 50 payment.

So it tends to get discounted.

What is a discounted cash flow?

Let's just go back to this present value problem.

What's the present value of 50 in 1 year?

So let's figure out what that present value is.

Because its present value is worth more than 100.

So the present value of something given you today, is the value of it.

That's all a discounted cash flow is.

So the present value of this payment should go up.

So actually this was meant to be the present value.

And then I want the present value of the 35.

Well, actually, what is the present value of the 100?

You might want to watch the videos on present value.

And then to get its present value, its value today, you divide that by 1.05 again.

So the present value of 20 today, well that's just 20.

But, if a cosmological constant is present, its value is different.

We'll get the present value of 110 a year from now.

So the present value of 110 in 2009 It's currently 2008

And because of that, it is vastly discounted.

Its present value went from 99.77 to 105.70, so it's almost 6.

But the whole topic, what we're trying to solve, is present value.

But when the present value is based on that, you get 99.77.

So in this circumstance, what is the present value of the 110?

And you are essentially discounting them back to get today's present value.

The price of this car is discounted fifteen percent.

So once again we have verified, by taking the present value of 110 in 2 years to today, that its present value if we assume a 5 discount rate.

Well the present value of that is going to be so plus 50 divided by 1.05, right that's the present value of the 50, because it's 1 year out.

But if you were to present value this let's say they make 1 forever going into the future and you were to present value this using a discount rate.