 Recall that the present value is the value of an asset is worth in today's dollars. There are three ways to solve for present value, using time value of money tables, using a financial calculator, or using Excel, which is the most common way. This video will show you how to calculate present value using time value of money tables. The formula to calculate present value is to take a future value amount and multiply it by the present value factor from the proper present value table. There are two tables we will learn about in this video. The first is a present value of a dollar, or sometimes called a single amount. This is used when we have a one-time non-reoccurring amount. The other is the present value of an annuity. This is for amounts that are reoccurring like annual interest payments. So let's look at a couple of different scenarios, and I'll show you how to solve them using the tables. For example, a $10,000 notes receivable do in two years at 5%. We know the future value is $10,000. Let's see what that is worth in today's dollars. And we'll do a $10,000 notes receivable do in three years at 12% compounded semi-annually. When we compound something semi-annually, we divide the interest rate by 2, and we multiply the number of periods by 2. We need to use the formula, which in this case is 10,000 times the present value factor of a dollar at 5% interest for two periods. So I've identified 5% in two periods on the table. Where they intersect is the present value factor of 0.907. So the present value of $10,000 do in two years at 5% interest is $9,070. For this next scenario, I need to convert the interest in the number of periods to match the semi-annual compounding. So I divide the 12% interest rate by 2 and multiply the 3 years times 2 to get 6% semi-annual interest and 6 semi-annual interest periods. Back to the table, still using the present value of a dollar because this is a one-time amount, I identify 6% interest and 6 periods. They intersect at the present value factor 0.705. So the present value of $10,000 do in three years at 12% semi-annual compounded interest is $7,050. Let's do one more example with the table only. This time we'll use the annuity table. What is the present value of $50,000 for 20 years at 6% interest? The formula for present value equals $50,000 times the present value factor of an annuity at 6% interest and 20 periods. I've identified 6% and 20 periods on the present value of annuity table. Where they intersect is the present value factor of 11.470. So the present value of $50,000 for 20 years at 6% is $573,500.