So the question says, what is the present value of receiving

110 one year from now, and I think some of you, or all of you are smiling.

Because you know why I am asking you this question with these specific numbers,

the interest rate is 10%, and I'm giving you $110 one year from now.

So think about this problem as something like this.

You're going to receive $110 in the future, one year from now.

You're trying to figure out what does it mean to you today?

And this is a very important problem to solve, right, because most problems in

life, you make effort today and you get money or pleasure in the future, right?

So, you want to figure out what's the value of that today and present value,

therefore is a little bit more important than future value for decision making.

However, future value, I think, is easier to understand and

it forces you to be a finance person.

Finance people look forward, finance people don't look back,

right, so that, hopefully, that's ingrained in you.

I'll tell you a little bit about what that has done to me.

[LAUGH] Because finance has changed me, in good ways mostly, but there

are some elements of it which are pretty hilarious, which I'll get to in a second.

Okay, so let's do this problem.

And I'm going to use, again, just a simple way of doing it.

And so, here you go.

You have 0, you have 1.

1 period has passed.

Remember always what connects 1 and 2 is time-value of money at 10%.

I've made it very easy, and I have 110 here.

So that's the problem.