English Subtitles for 3 Minutes! Net Present Value NPV Explained with NPV Example for NPV Calculation (Cartoon)



Subtitles / Closed Captions - English

Future Value, Present Value & Net Present Value in 3 Minutes NPV Time Value of Money

Example Future value, present value, and net present value in three minutes. What if you have one hundred dollars today and you put it in the bank in a five percent interest rate so that next year you will have one hundred five dollars? What is the name of the one hundred five dollars? It is called future value. In more complex problems, can we calculate the future value? Yes, using the future value formula. More in this later. Don’t worry. I promise it

is much easier than it looks. Now going back, what is the name of your original one hundred today? It is called present value because present means today. Okay. Now what if you only know the future value, can we calculate the present value? Yes, using the super easy present value formula. Again, more in this later. I promise it’s much, much easier than it looks. Now let’s take it one step further. What if we know many values in different amounts at different times in the future and present,

and some are payments while others are earnings and so they each have their own present value? Can we have just one combined present value for all of them? Yes. This is called net present value. We can calculate it using the net present value formula. Again, don’t worry. It is much easier than it looks. How do we use this net present value if we already know it? As an example, let’s look at a candy machine business. Let’s say you pay one hundred dollars for a candy machine today and you earn one hundred fifty dollars

from candies next year and then you earn back seventy dollars from selling the old machine after two years. If the net present value is positive, then it’s a good profitable decision to do this candy machine business. It means that the present value earnings is the bigger than the present value of payments. So you win. What if the net present value is negative, then it’s a bad decision to do this candy machine business. It just means that the present value of earnings is less than the present value of payments. So you

lose. That’s all there is to this basic concept. Easy. Want to learn net present value calculation the easy way? Check out my free videos and also download my free eBook at MBAbullshit.com. See you there. debbierojonan Page 1



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What if you have one hundred dollars today and you put it in the bank in a five percent interest rate so that next year you will have one hundred five dollars? What is the name of the one hundred five dollars? It is called future value. In more complex problems, can we calculate the future value? Yes, using the future value formula. More in this later. Don't worry. I promise it is much easier than it looks. https://www.youtube.com/watch?v=GJMad7KTpaw

Now going back, what is the name of your original one hundred today? It is called present value because present means today. Okay. Now what if you only know the future value, can we calculate the present value? Yes, using the super easy present value formula. Again, more in this later. I promise it's much, much easier than it looks.

Now let's take it one step further. What if we know many values in different amounts at different times in the future and present, and some are payments while others are earnings and so they each have their own present value? Can we have just one combined present value for all of them? http://www.youtube.com/watch?v=7FsGpi_W9XI Yes. This is called net present value. We can calculate it using the net present value formula. Again, don't worry. It is much easier than it looks.

If the net present value is positive, then it's a good profitable decision to do this candy machine business. It means that the present value earnings is the bigger than the present value of payments. So you win. What if the net present value is negative, then it's a bad decision to do this candy machine business. It just means that the present value of earnings is less than the present value of payments. So you lose.

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