There are two main levers that change the outcome of your calculation:
Imagine a friend promises to pay you . You know that if you had the money now, you could put it in a high-yield savings account earning 5% interest . present value formula
PV=1,100(1+0.05)1=1,1001.05=$1,047.62cap P cap V equals the fraction with numerator 1 comma 100 and denominator open paren 1 plus 0.05 close paren to the first power end-fraction equals the fraction with numerator 1 comma 100 and denominator 1.05 end-fraction equals $ 1 comma 047.62 There are two main levers that change the