To the left is an expression for the Present Value of any amount of revenue, R, to be received any arbitrary number of periods, n, in the future. In other words, PV tell us how much must be invested today at interest rate r to receive R dollars n years in the future. This is the Present Value of R.

    We can now compute the value in current dollars for an amount of money to be received at any point in the future, as long as interest rates don't change. Suppose there is an asset which will earn the owner $1000 in 4 years, but nothing until then. Suppose the interest rate is 10% and you anticipate that it will remain unchanged during that time. How much is the asset worth today?

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