Present Value 3
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u have helped me a lot
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i dont see any real advantage of finding the PV over the final value?
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btw the equation is a little cricked cause 20+50+35=105
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lol you should add inflation in there before everybody is running to the federal reserver :P
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hookup now bit.ly\n16lux
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man i wish we have teachers lyk u in our school :)
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@PhilipK100 % 5 years? where your sleeping during lectures or what?
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hey sal you just said in the beginning that this was "compounding" forward and "discounting" backwards. But when we calculated year3 values in the previous video we used the formula =PV(1+2r)=100(1.1)=110 which is the normal payment two years after with "UNcompounded" interest rate. Had it been compounded then we would use the formula =PV(1+r)^2=100(1.05)^2=110.25 which gives adifferent answer. So why do you call this "compounding" in this case?
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Hey sal, you said that this is "compounding" forward and "discounting backwards, but the way we calculated the year3 values in the previous video was by the formula: PV(1+2r)=100(1.1)=110 which is the normal way of finding the uncompounded future payment with annual interest. However if it had been compounded then it would be =100(1.05)^2=110.25. So why do you call the first choice future payments as compounded?
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can someone tell me why cant we work in forward terms? i find myself subconsciously calculating the interest rates forwards instead of backwards and finding the PV.
i mean, essentially both achieve the same aims of finding which option is the best so i dont see any real advantage of finding the PV over the final value? unless there are other reasons that sal hasnt explained?
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wow, you're my hero Sal!
kittykattykoo 3 years ago 16
I give this a A+. A perfect teacher!
LostinArnhem 3 years ago 14