NPV: The Gold Standard of Financial Decision Making Tools

Money is the Link between the Present and the Future

“The importance of money flows from it being a link between the present and the future”.

— John Maynard Keynes.

Keynes was a brilliant man who deeply understood money and economics. And his insights weren’t just intellectual and academic. He made two fortunes: one in the stock market and one in the art market. He understood value and investing and put his money where his mouth was.

The monetary linchpin between the present and the future is interest rates or discount rates. If you have a present value and you want to calculate a future value, we call it an interest rate. If you have future values and you want to estimate their worth today, we use a discount rate. Interest rates and discount rates are two sides of the same coin, to use a money metaphor.