[Verse 1]
Money today is worth more than tomorrow
A dollar right now beats future's bright glow
Why wait for payment when time keeps on ticking
Present value shows what future cash is really worth
Interest compounds while opportunities fade
Every delay has a price that gets paid
Calculate backwards from what you'll receive
To find the real value you should believe
[Chorus]
PV equals FV divided by one plus r to the n
Present value formula, say it again
Future cash discounted back to today
Time value of money shows the way
Discount rate rising, present value falls
Remember this rule above them all
[Verse 2]
Sarah has two offers on the table tonight
Ten thousand now or twelve thousand in two years' flight
With discount rate at eight percent per year
Which option gives more value, crystal clear?
Calculate present value of future payment
Twelve thousand divided by one point zero eight squared
Equals ten thousand two hundred and eighty-six
Present value tells us which deal really clicks
[Chorus]
PV equals FV divided by one plus r to the n
Present value formula, say it again
Future cash discounted back to today
Time value of money shows the way
Discount rate rising, present value falls
Remember this rule above them all
[Bridge]
Capital budgeting needs this foundation
NPV calculations across the nation
Cash flows scattered through time's long hall
Discount them back to compare them all
Higher risk means higher discount rate
Lower present values, don't be late
Time erodes the worth of money
Mathematics make it clear, not funny
[Verse 3]
Future value grows with compound power
Interest earning interest, hour by hour
One plus r to the power of n
Multiplied by present value, wealth begins
Annual compounding, monthly, or daily
Frequency matters, calculate it precisely
Effective rates versus nominal rates
Time value concepts open financial gates
[Chorus]
PV equals FV divided by one plus r to the n
Present value formula, say it again
Future cash discounted back to today
Time value of money shows the way
Discount rate rising, present value falls
Remember this rule above them all
[Outro]
From present to future, from future to now
Time value of money, take this vow
Every CPA must understand this core
Time value of money, foundation and more