The Time Value of Money
A dollar today is worth more than a dollar tomorrow. Here's exactly how much more.
Why a dollar today beats a dollar tomorrow — present value, future value, compounding and discounting explained with analogies, worked numbers and interactive charts.
Take $100 today or $100 next year? Everyone grabs it now — and the reason isn’t impatience, it’s math: money you hold today can be invested, lent, or put to work, so it quietly grows into more than its face value. That one idea — money has a price for time — is the bedrock under interest rates, loans, bonds, valuations, mortgages, and every DeFi yield you’ll ever see.
Built from scratch, this topic covers:
- Compounding — how today’s money snowballs forward over time.
- Future value — what a sum you hold now will be worth later.
- Discounting — how tomorrow’s money shrinks back to today.
- Present value — what a future payment is really worth right now.
- The discount rate — the dial that controls how fast that shrinking happens.
Get this straight and the rest of finance stops looking like magic — it’s the first rung on the ladder everything else is built on.
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