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Okay, so, um, let's move on to the second part, theThe time value of money.

So the, theThe basic idea is that a euro today is worth more than a euro in a year. Why? Because, uh, if you have it today, you can invest it,: you can put it in the bank and earn interest on it. So if If the rate is five percent, a hundred euros today becomes a hundred and five in a year.

And ifIf you flip it around, um, a hundred and five euros in a year is worth a hundred today. That's discounting, that's what we call discounting, and it gives you the, uh, the present value. So the present value is: the future amount divided by one plus the rate, to the power of the number of years. Right.

And there are, there are really threeThree things thatreally drive it:

  • the amount,
  • the rate, and
  • the time.

We'll take them one by one.

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