Hey founder👋 why ₹1 today is more valuable than ₹1 tomorrow? Let me break down the concept of Present Value (PV)—it’s simpler than you think! It’s the value of future money today, adjusted for risk and opportunity cost using a "discount rate." It helps you decide whether future earnings are worth the wait! Example: Imagine you’ll receive ₹10 lakh in 3 years, and the discount rate is 10%. Here’s how we calculate its PV: - Year 1 = ₹10L ÷ (1+0.10)^1 = ₹9.09L - Year 2 = ₹10L ÷ (1+0.10)^2 = ₹8.26L - Year 3 = ₹10L ÷ (1+0.10)^3 = ₹7.51L Present Value (PV) = ₹9.09L + ₹8.26L + ₹7.51L = ₹24.86L
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