Present value

What a future amount is worth today, once discounted at a rate that reflects the wait and the risk.

₹5,00,000 due in three years, discounted at 12%, is worth ₹3,55,890 today.

The sensitivity to the rate is the thing to feel rather than know. Discount the same ₹5,00,000 at 10% and it is worth ₹3,75,657; at 14% it is ₹3,37,435. A two-point swing in an assumption nobody can measure precisely moves the answer by more than 10%, and that is at three years. Stretch the horizon to fifteen years and the same swing changes the answer by roughly a third. This is why an intrinsic valuation is honest only when it is presented as a range, and why anyone quoting a target price to the rupee is describing their spreadsheet rather than the company.

Discounting is not precision. It is discipline about uncertainty.

Wait longer, or risk more, and it is worth less.