How does estimating the present value of an investment lead to better financial decisions?

What will be an ideal response?

The Present Value (PV) function allows for a future investment to be calculated in terms of today's dollars. This can allow you to compare if the investment is worthwhile or not by comparing it to the interest rate of a risk-free or low-risk investment like bonds. For example, the PV function can help determine which is the better option, receiving $1,000 today or $1,010a year from now if you have a guaranteed return on investment of 2.5%.