Focal date worked example

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You should have paid someone $500 78 days ago. Someone else should pay you $600 in 95 days. Interest is 10%. What is your net worth today?

X----------------------------------X-------X------------------------------X

500 Today New Focal 600

FV of 500 = 500(1+0.1*78/365)= 510.68

PV of 600 = 600/(1+0.1*95/365) = 584.78

TODAY (focal date) you owe 510.68, your assets are 584.78, so net worth is – 74.10

But we could pick any date. Let’s try ten days from today. This changes the number of days:

to 88 for the 500

and 85 for the 600

FV of 500 = 500(1+0.1*88/365) = 512.05

PV of 600 = 600/(1+0.1*85/365) = 586.35

Net worth is 512.05 – 586.35 = - 74.30