So$,$ what is a present value, and why is it important to be able to calculate it$?$

LEXI: According to Dr$.$ Boudreaux, an asset$$s present or compounded 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$.$

Scenario $1$: You would like to know how much you should place on deposit to have accumulated a certain amount of money by a specific future date.

Scenario $2$: You would like to know how much a given amount deposited today will grow into by a specific future date.

LUKE: Ummm. I think is the situation that requires the calculation of a present value.

The reason is that the amount to be placed on deposit is both and occurs $.$