Lesson: Net Present Value

In this lesson, Nick Palazzolo, CPA, demystifies the complex concept of Net Present Value by breaking down present value factors, time, and the value of money with straightforward examples. He talks about why money holds more value today than in the future, and how present value calculations are applied in practical financial situations like bonds and leases. Nick dives into the intricacies of utilizing present value factor charts, elaborating on the role of actuaries in determining these factors, and conveys the relevance of these calculations in financial decisions. He clarifies when and how to use different present value tables for lump sum payments, ordinary annuities, and annuity dues — ensuring the concept is crystal clear by the end of the lesson. With Nick's guidance, the idea that money now is preferable to money later due to the potential to reduce debts or invest, is not just a theoretical concept, but a tangible tool illustrated vividly through relatable scenarios.