Fred Wilson is a very well known VC and blogger. A few weeks ago he started a blog series called MBA Mondays, during which he explains a topic he learned in business school- and does so in a simple way that allows anyone to quickly catch-on. It’s a great series (I actually use it to supplement the MBA Finance class I’m currently taking!) and he’s covered some important subjects. Links to his first three Monday posts below:
- Net Present Value (NPV): A way of evaluating future money (say, future money you earn) according to the value that future money has now. So if someone said “sell me the next 10 years of your salary,” what would that money be worth now? It’s linked to the second topic.
- Time Value of Money: Fred admits he should have blogged about this before NPV, but better late then never. As he puts it, time value of money is the idea that “money today is generally worth more than money tomorrow.” Determining that time value of money allows the determination of the NPV.
- Compounding Interest: a form of interest that (simply put), adds the interest being earned to the principal, so that it compounds as it earns. He explains all this much better….
It’s a very cool series- check it out every Monday and enjoy!