Session 6: The Time Value of Money

In this session, I look at the intuition behind why money has time value and the mechanics of present value.

[ramjiYahoo]

The main fundamental concepts are explained nicely Sir, we owe a lot to you

[buckmanriver]

I could never conceptualize the concept of discounting as my undergraduate ECON Profesor explaned it. Dr. Damodaran you simple explation of the fundmenal consept was so enlightening to me. I think I finnaly understand this consept as it realts to value of monely over time. Thank you for posting this session!

[wood]

A living legend. Thank you so much, Professor

[himanshubarnwal]

Namstey Sir, I want to ask that how higher preference current consumption will lead to higher discounting rate. Explain with an example.

[DanceCity]

may you please do examples for time value of money.. for each type of cash flows

[ICantSpellDawg]

I see equations and I freak. I'll come back to those

[nealsutaria]

how did u get the answer to question 2? I though .01/52 = .0001 so I ended up getting just 1%

[itsnotraunaq]

I have a doubt. For Q3 in the post class test, I calculated the PV through this formula: PV($8mn, 5%, 5yr) + PV($12mn, 5%, 10yr) - PV($12mn, 5%, 5yr). Shouldn't this be the more accurate way as compared to the formula in the answer sheet i.e. PV($8mn, 5%, 5yr) + PV($12mn, 5%, 5yr)/(1.05)^5 ?

[dimplepatel]

Sir please teach some sums....end of every sessions..

[mrinvestor]

13:06 formula is incorrect. (1+g) is extra

[mohannaik]

Forgive me if this sounds cheesy or offends you sir, but are you a fan of Eminem of some rapper! i.e., your fluency in the subject inspires students & teachers. Thank You.