Interest Rate is Interesting – Discounted Cash Flow Analysis

Perhaps the most important life lessons are learned in childhood – “time and tide waits for none” or “time is money”. That is exactly what the interest rate is all about – the time value of money. Money today is worth more than money tomorrow. The concept of time is crucial in forest management. Because forestry is a game of patience. You prepare your site and plant your trees this year, fertilize in a different year, and harvest quarter to half a century later. When to harvest is also a very important question. The real question here is “how do we compare income and costs that occur over time”? That’s what we are gonna learn today.

Specifically you’ll learn –

  1. Concept of Interest Rate
  2. History of Interest Rate calculation (why is it called Interest Rate, by the way? Watch the Video!)
  3. How to calculate Future Value
  4. How to calculate Present Value
  5. How to calculate Net Present Value or NPV
  6. Why is this concept so important?

For your convenience, the associated excel file with all the calculations and the assignment is uploaded here……

Ask me anything about this topic in the comment section below!


Leave a Reply

Your email address will not be published. Required fields are marked *