Starting from zero · Course 7 of 11 · Stage 2
Financial mathematics
Present value, annuities, NPV, IRR and the difference between the average return and the one you got. Arithmetic you can check by hand.
Every valuation in this academy discounts something. Until now the discount factor arrived already built. This course builds it, and then builds the eight other pieces of arithmetic an investor uses without noticing.
Nine lessons, in order. The first four are the machinery: present value, the factor table, the compounding conventions that make one stated rate mean four things, and the streams. The next two are the decision rules, NPV and IRR, with the assumptions each one hides. The last three are about measurement: why the average annual return is not what you ended with, why the fund's return and the investor's return differ, and why a return without an inflation basis is not a number.
The arithmetic is round and hand-checkable on purpose. Where a rate is needed, it is a real one: the US Treasury par yields for 11 September 2026, which is also the last session ValueScreener stored. Two lessons use filed figures from a real company's ten annual reports, with the accession numbers.
Nothing here tells you what a rate should be. That is the next course after this one, and it does not have a clean answer either.
The tools, not the work
Financial mathematics is 9 lessons on the arithmetic and the rules an investor has to be able to handle: the discounting, the probability, the standards, the tax. They are what you work WITH. None of them is work done on a company you own, and a tool understood is not a book checked.
Related
- Compounding, and what time does is the idea this course turns into arithmetic, and the one lesson you should read before starting.
- What a discount rate is doing is where the rate this course applies comes from, and why nobody can hand you the number.
- DCF calculator runs the year ladder this course builds by hand, with the terminal value shown as a share of the answer.
See our methodology for how the product reads a filing and what it refuses to compute.