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Published: 18th September 2009 by William Webster

A dollar paid to you now is worth more than one paid to you in the future. Why? Because if you had a dollar now you could invest it and earn interest. Simple enough but exactly how much is money worth today when it is paid in the future? To answer that you need to know about discounting.

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Document Summary

Discount factors, example. What changes discount factors. Practical application. Mark-to-market values. Interest rates and effect of credit risk on present value.

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