If the concepts of finance were to be listed down in order of their importance, the concept of ‘Present Value’ will be at the top of that list.
In simple words, present value describes the process of determining what a cash flow to be received in the future is worth in today’s rupees.
In simpler words, it is the value today of an amount of money in the future.
“I’m still not getting it!” you might say.
“How do you calculate present value?”
“What’s the relevance of present value in investing?”
Well, if these are some questions that crop up in your mind as soon as I use the term present value, and before you junk it as some ‘difficult to understand’ concept that you must not worry about, just check out this small video.
[Read more…] about I Wish Someone Had Taught Me About ‘Present Value’ This Way