How to Calculate Present Value
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- Опубликовано: 1 окт 2024
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In this video I use the present value equation to discount a future payment in today's dollars. We know that due to the time value of money $1,000 three years from now is not worth the same as $1,000 today. In order to make an accurate comparison we need to discount our future cash receipts to see what they would be worth today.
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I’m watching this so my mum hears it and thinks I’m doing my homework 😏
😂😂✌️
i dont do that that is bad
@@yuufiea wow that is so cool
OMg Thank you!! This has helped me understand this equation for my homework assignment! I wish I knew you in rl, I'd buy you some coffee
How do you get 1.157625??? I’m taking the series 66 and only get a 4 function calculator in the proctored exam, how am I supposed to do “power of”?
Thanks very efficient, brief succinct and great for visual learners like myself!
+Jimi Hendrixx Glad you to hear that Jimi! Thanks for watching and please subscribe if you haven't already. That way you receive update on new content. Take care!
+Alanis Business Academy done as soon as I watched the first clip.
Thank you! Studying for the PMP and couldn't figure out why I was getting this wrong... this is gold! Thanks!
show me...how you calculate (1+k)3
Took you 3 and a half minute to say the answer.
hurry tf up next time
it's actually 1,295.75
Thank you SOO much for the help! I greatly appreciate it!
if this question said that ..for example: to get $1500 AT THE END OF 3 YEARS. can i still use this step that you show? or i have to use Ordinary Annuity formula?
Sir plz guid me if he ask... Q . After a down payment of 300000 a man will pay 20000 per month for 4 years @7% p.a compouned monthly, find cash price
Great refresher, after many years...
how did you get 1000?
1:02 Borrowing $1,000, Promising to pay $1,500 in 3 years
2:00 FV= 1,500 , N=3, Interest Rate= 5% ,
PV= ???
3:10 PV= FV/(1+ IR)^n
Clear and concise explanation. Thank you!
thanks dude it is really work!
You're welcome!
Very helpful VDO thank you sir
You’re welcome! Thanks for watching.
i don't get it :(
same here
umm im grade 2 but i learned this already but my mom is smart too and i can
help you guys!
I have a question
how to calculate if I only have capital and interest
you can't round off the answer if the answer is a money
great, explained in very easy way
How would you do this math on a standard calculator?
im confused on how you got 1.15 if we are multiplying to the power of 3 shouldnt it be 3.15. im following the pemdas rule.
I'm confused
excellant tutoring video
From where can we find interest rate? I don't get the i section...
is calculating the gain on the investment (subtracting 1000) needed to calculate present value?
Wow thank you so much!
I understood the math, I still don't understand the analysis part. The present value of the $1500 in accordance with the interest rates given three years from now, is actually $1295. Or could we say that after three years the $1500 promise decreases to $1295?
Not necessarily because we are trying to calculate the present value as opposed to the future value. By discounting $1,500 we would say that the $1,500 we expect to receive at 3 years is worth $1,295 today. This is meant to incorporate the time value of money, since we will incur risk by not having the money for three years. That isn't to say that we would actually receive less in terms of the actually denomination of currency, but rather our spending power will have decreased. I hope that helps clarify.
Man this was so frustrating, i didn't know you have to change the interest to decimal. Thanks a lot!!!
Easy fix!!
Thanks
Payments of $ 670 are being made at the end of each month for 5 years at an interest of 8% compounded monthly. Calculate the Present Value.
Can anyone give me a solution of this question because i really need it ??
and i have one more question to get solve...
455.9907
@@selfie1562 hello can you pls explain the math behind it or formula because I’m super stuck. Thank you
You're doing great job! Keep it up! 👍
Thanks, great help. I just wanted to make ensure my equation for PV was correct.
How come the bonds already come with a interest rate then? How do they know how much you could have made with that money?
singh4244 Bond interest rates vary based on a number of different variables. We're using those interest rates as a guide for discounting our future cash flows as that rates represents what we could've earned.
your video really helped me
Glad I could help!
Thanks for you are lecture
thank you for the help, its been over a year since i've done this!
It is very clear and help me a lot
why is the interest rate 5%??
isn't it 50%？
had to speed this shit up to 1.75...could one speak slower? thanks for sharing tho )
i got it but again why we've to subtract 1000 from the above value (1295.76) 😐
he subtracted $1000 to basically calculate the gain on investment. Youre giving up $1000 today in order to receive $1500 in 3 years. The PV calculation tells us what $1500 in 3 years is actually worth which is $1295.76. So the actual gain is $1295.76 (return in 3 years) minus the $1000.00 (todays investment) which is $295.76
@@regisuwakwe8024 Looks to me the $1,000 was subtracted unnecessarily and he made a slight mistake in his explanation. The initial investment wasn't $1,000, he kind of pulled that number out of thin air. The initial investment was $1,295.76 or present value rather of $1,500 in 3 years is $1,295.76. If he was going to subtract anything, he should've subtracted the $1,500 - $1,295.76 to show a gain of $204.24 from this investment. The present value of $1,295.76 equates to a future value of $1,500 considering a savings account that yields 5% over a period of 3 years.
Troy Lee It wasn’t a mistake. He is comparing receiving $1000 today from a friend and earning $1500 in 3 years versus investing $1295.76 today at 5% interest and earning $1500. You should choose to invest $1000 and save 295.76 in cash while still making $1500 in 3 years.
Ced Ricky I see, so $1,000 was a business proposition that has a lower initial cost than the Present Value of this 3 yr 5% interest investment. Therefore, he’s saying you should accept a hypothetical $1,000 investment prospect as you realize $295.76 in profit right away when considering the present value of a $1,500 payout from that 3yr 5% interest investment.
Thank you for this video. I was getting some problems solving the present value, but your video helped me.
I'm studying for the PMP exam, and I was SO intimidated by this dang equation. My study materials didnt explain it in a way that was making sense, so I can to RUclips and this is the ONLY video that helped! THANK YOU SO MUCH!