Understanding Present Value - Revised

This course starts off by stating what the concept of present value in accounting is all about and then discusses how to find it through simple calculations. It then shows you that determining the appropriate discount rate is the key to properly valuing future cash flows, whether they be earnings coming in or obligations going out. It will also teach you why the calculation of present value is extremely important in many financial calculations such as net present value, bond yields, spot rates, insurance rates and pension obligations.

You will then learn how to calculate present value so you will be able to decide whether you should accept a cash rebate, 0% financing on the purchase of a car, or pay points on a mortgage. The material will also show you when the best time to invest your money in the bank is by computing what will your money be worth one or two years from now.

The concept of present value lies at the core of finance and is the basis for stock and bond pricing, financial modeling, banking and insurance. Every time a business does something that will result in a future obligation, it must calculate the present value of the future cash inflow or outflow. By the end of this course, you will be able to compute the present value of your current investment, which will greatly help with your future finances.