Present value Future dollars into the present Suppose someone promises to pay you $100 one year from now What is the maximum amount you should be willing to pay today for such a promise? You are forgoing the interest that you could earn on the money that is being loaned6 Present Value: Future Dollars into the Present • Suppose someone promises to pay you $100 one year from now. • What is the maximum amount you should be willing to pay today for such a promise? • You are forgoing the interest that you could earn on the money that is being loaned