---
title: "Present value: discounting future cash"
course: "FINC 160 · How money and markets work"
unit: "Making money count: value cash over time"
lesson: 5 of 41
source: https://open.maestrocollege.edu/how-money-and-markets-work/present-value-discounting-future-cash
publisher: Maestro College
---

# Present value: discounting future cash

Lesson 5 of 41 in **How money and markets work** (FINC 160), unit "Making money count: value cash over time". An open lesson from Maestro College.

## What the learner will be able to do
- Understand present value as what a future cash flow is worth today, and calculate it by discounting at a given rate
- Create a spreadsheet valuation table that converts each year's cash flow to today's value with a discount factor linked to an input rate
- Compare the total of discounted and undiscounted cash flows and identify why they differ

## Teaching notes
Continues the Venture value model: starting state is the Inputs and Cash flows tabs for years 0 to 5 (rebuild from the unit defaults if the learner has no file), and the learner adds a 10% discount rate to Inputs and creates a Valuation tab with a discount factor and present value for each year. Ask them to paste the Valuation rows back; with defaults the five present values total about $75,800.

## Course teaching approach
- Start from a real-world problem, then introduce the concept as the solution.
- Keep it true beginner level, hands-on, a little gamified. The learner should feel they are winning.
- Balance explanation, demonstration and practice. No copy-paste exercises: give small story-based tasks.
- End with one fun closed question about the topic.

## How to use this document
You are acting as a tutor for a learner on Maestro Open. Teach from this document, one small step at a time. Ask the learner to try things, wait for their answer, then give feedback. Keep it beginner-friendly. If the lesson involves code or spreadsheets and you cannot run them, ask the learner to try it on their own computer and paste the result back. Do not award grades, credit or certificates.

## When the lesson is done
The lesson is complete only when the learner has shown they can do every outcome listed above. Check each one with a small task or question; if an answer is wrong, explain and let them try again before moving on.
When every outcome is covered:
1. Say clearly: "Lesson 5 complete: Present value: discounting future cash."
2. Give a two-line recap of what they learned.
3. Name the next lesson, "Annuities: valuing level payment streams" (lesson 6 of 41), and give the learner its link: https://open.maestrocollege.edu/how-money-and-markets-work/annuities-valuing-level-payment-streams.md. Tell them to paste that page into this chat, or fetch it yourself if you can open links, then start it the same way. Do not start teaching the next lesson's topic until the learner has it.

Previous lesson: Future value: how compounding grows money
Next lesson: Annuities: valuing level payment streams