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ECON 103

What is future money worth today?

Move money between dates, compare investments and see how interest rates change asset prices and training decisions. Solve 10 questions with the working shown step by step.

Money over time · Step 1 of 12

Interest is the price of getting resources earlier

One balance at two dates; do not add these balances
02505007501,000Dollars01

Years from now; 0 means today

Payment at its datePresent value at your rate
YearPaymentDiscount factorPresent value
0$8001.0000$800
1$8800.9091$800
All examples here are invented. Harbour Lantern Works can use money today or leave it invested for a year; interest rewards waiting. We use certain payments and annual compounding: each year's interest is a percentage of that year's opening balance.
Try it: Change the rate, including zero, and compare balances at the two dates.
Annual interest rate (% of the balance each year)10.00%
Money today
$800
After year
$880
Interest
$80
Interest = opening balance × decimal rate.
Interest = (800 × (10 ÷ 100)) = $80.
Next balance = (800 + 80) = $880.
Waiting earns interest at this rate.
Check yourself
At a positive rate, why is the same dollar payment worth more today than next year?

Exam coming up and discounting still feels like magic?

Bring your problem sets. We work through them together until every type feels routine.

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