Present value Future dollars into the present Present value is an enormously important concept A$1,000,000 payment 20 years from now is only worth today 376889ir=.05 $148,644r=.10 1010 Present Value: Future Dollars into the Present • Present value is an enormously important concept • A $1,000,000 payment 20 years from now is only worth today: – $376,889 if r=.05 – $148,644 if r=.10