Question: LUKE: So , what is a present value, and why is it important to be able to calculate it ? LEXI: According to Dr .

LUKE: So, what is a present value, and why is it important to be able to calculate it?
LEXI: According to Dr. Boudreaux, an assets present or value is the current value of the cash flows that it will pay or receive in the future.
LUKE: Wait! Can you give me an example of when it would be appropriate to calculate a present value?
LEXI: Sure, but it might make more sense for you to identify such a situation. So, tell me in which of the following two scenarios you would use a present value calculation, and then explain why that is so.

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