What makes things really interesting, is that I can use the concept of time value of money in order to compare projects. That don't necessarily have the same investment or the same revenue. And also, we don't see the cash flows at exactly the same time. Let's consider an example. And see how the concept can be helpful here. In this example, I'm going to have two projects. Let's see the first project. Let's assume that in our first project, we actually are going to invest some money today. We're going yo invest 100k today. And let's assume, that in one year's time. One year time. I am going to benefit. And I am going to see revenue. Let's say, 200k worth of revenue. This is project number one. Project number two, however, is different. In project number two, I am actually also going to have an investment today. But this investment is going to be slightly larger. I am going to invest 120k. This is what's required in order to engage in project two. In project two, I also see some revenue. But I don't see it in one year time. I'm going to see it two years time. And in two years, I am going to see a value of 250k. And so the question is, how can I compare a project that gives me some benefits or some revenue in one year. To a project that takes longer to produce some benefits. But the benefits are higher? I can't simply look at net, for instance, here. A net of 100 thousand, I cannot look at 100k here. And compare these two projects. 100k here and, for instance, a net here 130. That is not a valid comparison. Because, as we've establish before, the timing of this cash flow matters. And so how are we going to do that? Well, here is the trick. What we're going to do is, we're going to think about these concepts. Or these sums of money in today's dollars. We are going to take the idea that if we get 200k in one year time. What is it worth to us? How can we translate it into today? Into present-value dollars? Well, we also need to know what rate we can invest at. So let's assume that we have an opportunity to invest at a 10% rate. And so $200 in one year's time is actually comparable to something around $181.8 thousand today. What does that mean? That means that if I take $181 thousand. And then put it in a bank account. And allow it to grow at a 10% interest rate, I will have 200k in one year's time. So obtaining or getting a benefit of $200 thousand in one year is the same as getting a $188 one today. Similarly, if I look at project number two. Getting $250 thousand in two years, is actually the same as getting something around 206.6 today, in today's dollars. And again, the same logic applies. If I take 206.6. And I invested in the bank at a 10 % rate, it will grow. And within two years, I would have $ 250,000. And so now I'm in the better position to compare. Likes for likes or apples to apples. Because my net present value here will be something around 81.8 thousand dollars. My net present value of project number two will be something closer to $86.6 thousand. And so in this case, project number two is the more financially worthy project to obtain. We needed three things in order to consider these projects and to take into account the time value of money. We needed the magnitude of the payoffs. The investments and the benefits. We needed to know the timing. When do we pay out? And, when do we see in comings? Or, when do we get the revenue? We also needed to know the rate in which we can gain interest. We call this the hurdle rate, or the rate of return. And so in order to put these concepts together, we can then look at different projects over different horizons. And value them in a way that allows us to compare them. That is the beauty and that is the power of the time value of money calculation. Next, you will see how this concept applies to the domain of pricing. Or applies specifically to the domain of customer lifetime value.