Talking about present value or getting a promise of something in the future.
It is not just interest rate but also inflation you need to think about. Not to mention broken promises and not paying back in the future. Bring in the value of a hamburger now or in the future or a painting or gold. It sure gets more complex. What about getting a hamburger now and keeping it for a few years? It is always difficult to get people interested in something I saw a short demo recently of how to get the bones out of a chicken with a minimum damage to the skin. It is pretty easy now that I know how to do it and I have done it a few times. I am wondering why I did not start doing it years ago. - Björn Helgason gsm:6985532 skype:gosiminn On 22.2.2014 01:42, "Don Guinn" <dongu...@gmail.com> wrote: > Years ago I was in a class where the day's topic was the present value and > future value of money. The teacher asked for a volunteer. As you know, kids > are reluctant to volunteer. He finally got a volunteer. The student came > up, he gave the student a dollar and said thanks for volunteering and he > could sit back down. Then he asked for another volunteer. Now lots of > volunteers. He picked one. He gave the student a business card which he > wrote on the back that he could redeem it for a dollar one year from that > date. The student sat back down. > > Then the instructor asked the first volunteer if he wanted to trade, which > he didn't. The instructor asked him "Why not trade? They're both worth a > dollar. Well, how much would you charge to trade?" Needless to say, the > following discussion made the differences between present value and future > value and risks in future investments become crystal clear. And he never > had to resort to any arithmetic. > > That really taught me the importance of present value of investments that > mature in the future. So I think of for example, a dollar three years from > now is only worth a little over $0.86 today at 5% interest. A different way > to look at it, but easier to explain to kids. > > I had that business card stuck on my bulletin board in my office for years. > Don't know what ever happened to it. > > ---------------------------------------------------------------------- > For information about J forums see http://www.jsoftware.com/forums.htm ---------------------------------------------------------------------- For information about J forums see http://www.jsoftware.com/forums.htm
