Present Value 2 | Interest and debt | Finance & Capital Markets | Khan Academy
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- Опубліковано 5 вер 2008
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More choices as to when you get your money. Created by Sal Khan.
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Finance and capital markets on Khan Academy: If you gladly pay for a hamburger on Tuesday for a hamburger today, is it equivalent to paying for it today? A reasonable argument can be made that most everything in finance really boils down to "present value". So pay attention to this tutorial.
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Over a decade later and this dude is still helping students, nothing but respect to this guy
10 years ago I flunked this for my mba really crushed my spirit. Today I understand better.thank I wasn't dumb my lecturer was just not invested in his craft.
5 minutes of your video is more beneficial then my 3 hour lecture of postgraduate finance degree
x2
I can now tell my sister, (who got her MBA from Oxford) that I have got my MBA from Kahn Academy for free!!
Thanks so much for these videos and keep it up!!!
ur hired
2017 whooo im watching them, thank you!
October 2015, your lesssons are still very helpful. Thanks.
the type of humor at 3:40 almost sums up why I watch your videos.
Sal, you get an idea across while being candidly funny. Don't worry, we always like your mini rambles!
I had an hour lecture today and I learnt more in 3 minutes than I did. They didn't do a very good job of clarifying, just assumed you understood it. 2021
May God protects you Bros ... You are really helping people around
The way you explain concepts in your videos and illustrations is great!
Great Sal! Thanks a lot! I love your style of teaching on pen-scribbing paper! Genious!
10 years ago I flunked this for my mba really crushed my spirit. Today I understand better.thank I wasn't dumb my lecturer was just not invested in his craft.
april 2017, thank you for sharing this lesson, it's super amazing
It's 2016 and i'm watching your videos!! Soo helpful♡
As simple as it gets. Thanks!
28/7/2016 thanks Khan academy we still get a big benefit from yous
2015, May 31, and I am using this. Great information.
THANK U SOOO MUCH, YOUR EXPLANATION IS A LOT EASIER TO UNDERSTAND
THANKS SAL!!!
watching in 2019 lol
THANK YOU, THANK YOU!
thank you very much!
13 years later and your formula taught me more than my Cal Poly class
thank you!
THIS GUY IS SOO AMZINGGG !!
Just great...!!! You made something complicated so easy to understand in principle...i also love the virtual calculater!
I am your first like
Thank you 😊
Thanks my hero 💜
This guy is a legend
Made in 2008 still helpful 2 days from now.
nearly a decade later...2018
Watching in 2020 :)
2020 and still being viewd
Helping me in 2021
still helping at 2023
Regarding the Federal government defaulting... It has: Gold bonds, Silver certificates, War bonds (pick a war)...
Can i get more commentary from Sal?
Sal i don't quite understand what inflation and interesrt rates have t do with one another... I mean I doubt inflation would be the same level as interest rate... Love youre videos learnig so much just want to understand that.
it may have something to do with the demand of money. the higher the interest, money demand for speculative purposes will decrease, thus the supply of money will decrease too, lowering the inflation rate.
sorry if the words I use are economically incorrect, I'm not a native english speaker, but hopefully you get the point :)
Basically if the inflation rate is higher than the interest rate then you are essentially losing money in REAL economic terms. For example, if you have $100, invest it and make 5% you would now have $105 Nominally, but if the inflation rate is 6% then you would actually be losing money, because the your investment needs to have a return percentage higher than the inflation rate to actually make REAL money in economic terms. That 5% interest rate with the 6% inflation would actually mean you would have $99.06 when converted back into the previous years price level.
1 = 100% which is the principal amount + .05, the interest rate.
I've got 99.77 problems, but present value ain't one
99.75 shoul be the value I guess!
can this "risk-free rate" also be taken as like inflation?
@krizutch
He was answering a question.
Hi! What's up? Can the future value be less but the present value is higher (such as in choice 2, PV = 10079.65 which is more then the principle, however, the FV=11000) for example, in choise 1). p=10050, rate=13 t=2years FV=12,832.85. in choice 2). p=3000, 2nd year=4500, 3 year=3500 totaly pays = 11000 if we calculate the PV = 10,079.65. Thanks in advance!
Sorry, i made a mistake in the last part not 2nd and 3rd year but just 1st and 2nd.
so basically there exists a sum of money today a sum of money later and a risk free growth percentage in the time period of today to later. you then work out the present value of the later sum by dividing the later sum by the risk free growth percentage. whichever present value is greater is clearly the payment you should choose.
were do you get the 1.05?
but federal treasuries don't give you compound interest though do they, they give simple interest right?
Lol @ 4:54 the answer 105*1.05 was already there XD Thanks a lot for the video.
Compute the present value PV of the following income stream I(t), assuming an continuously-compounding interest rate of 5 per cent (r=0.05). The income stream is the following: for the first 10 years, you get nothing. Then, you get income at a constant rate of ten-thousand (10,000) dollars-per-year in perpetuity (that is, you get money at that rate for all future time).
you made a mistake in year one. It is supposed to be 110/1.05 instead of 1.15.
4:53 writes down 105*1.05 when it is already solved right above on the calculater 105*1.05 = 110.25 :P
Perhaps its outside the point of calculating the PV, but wouldn't option 3 be the best over a 2 year period? Because you would have (20x(1.05^2))+(50x1.05)+(35x(1.05^2) = $113.14?
The 35 dollars is given to you in year 2, therefore it won't get the 1.05^2 interest. So you'll actually get about 107,70 dollars.
how can i get a calculator like that on my pc?
LMAO!! if the sun does not supernova..best way to say risk free!!!
I'm lost as how to calculate exponents on a calculator - how do you use the power / square function? perhaps I'm being stupid.
4:55 genius!! calculating something you already have above :D
2021? Anyone else?
i want a virtual TI-85 too :D
Why is $20 in Choice 3 added w/ 50 and 35 whereas Choice 1 and 2 are left alone. I understand the division per # of years. But not sure why Column three is all summed up.
Can someone please kindly explain to me why you do not square for choice 1 but you square for choice 2 and 3? Sorry...i'm really basic :(
Can someone please answer: Choice one come out in a total profit of $10.15 while choice 2 gets a profit of $10.23 so wouldn't choice 2 be a better option.
u need to find out the net worth.its like u get 10 dollar profit after selling something in 110 dollar which had cost price of 100. while u get 50 dollar profit while selling something in 100 whose cost price is 50. so in first case your net worth is more,right?
drew down
What you’re missing is that Choice 2 gives you $10.23 on a smaller starting number ($99.77). In two years you end up with exactly $110.
In Choice 1 you start with $100 and make a profit of $10.15. In two years you end up with $110.15.
Therefore, Choice 1 makes you richer in the future than Choice 2 does.
He used the compounding interest equation to explain this but.... don't bonds use simple interest ?
Hahah, that would be a dedicated banker, the sun goes nova, the universe goes heat death, but you're still getting your money!
please pray for me..i don't want to fail this subject again....
"if the sun does not supernova"
ROFL
nov. 22 2022 btw
1 + 5% = 1.05
couldn't you save the $20 get the 5% interest over a year. then get the $50 and add that to your investment for the next year (74(1.06)). Finally add the $35 and end up making more money? Making the third choice the better outcome. (2021 and the video is still relevant)
2020!!!!!!!!!!!!!!
We have arrived at 2012, and the words federal government and risk free in one sentence made me smirk. Unfortunately
Today Sal, please. By the time you finish, I would have the $110.25
I can't watch the video :( I don't know what's wrong...
I donated 20
Great Teaching but can you make better and clear handwriting?
But the main question is... why would you give us $100 dollars? D: ~
Inflate the currency to death.
Your tangents are so annoying.. just get to the damn point. We get it, you are the safest person to risk to, we get the government is safe, we get that inflation could occur. you aren't discussing those things...... stay on topic.
This video could have been 3 minutes long if you just stayed on topic and didn't repeat. If we want to repeat we can rewind it.