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Present and future value are the cornerstones of practically any financial analysis. Present value is either known or can be calculated, if we agree on the likelihood of outcomes and the time value of money. We can’t do much about the present (whether we like it or not), but we can surely prepare for what lies ahead.

We may be unable to predict or influence the future, but financially at least we can put acceptable boundaries around outcomes (likely or not), and even acts of God. At a basic level, we pay for insurance not because we know the house will burn down, but just in case it does. It works in the aggregate because individual risk is able to be priced off general experience...

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