Example
$\$100$$+\$100$$=\$200$Instead (Assume r = 1%)
$\$100$$+\dfrac{\$100}{(1+0.01)}$$=\$199.01$What if we received $\$100$ for 6 years starting next year?
$PV = \dfrac{\$100}{(1+0.01)^1} + \dfrac{\$100}{(1+0.01)^2} + \dfrac{\$100}{(1+0.01)^3} \\ \space \space \space \space \space \space \space \space + \dfrac{\$100}{(1+0.01)^4} + \dfrac{\$100}{(1+0.01)^5} + \dfrac{\$100}{(1+0.01)^6} $$=\$579.55$
This is an example of an annuityWhat if we received $\$100$ for 6 years starting next year?
What if we received $\$100$ for 600 years starting next year?
What is the present value of receiving $\$100$ every year forever, starting one year from today? Assume $r=1\%$.