This chapter introduces the three basic and related concepts that form the very foundation of modern day finance: present value (PV), net present value (NPV) and opportunity cost. Present value gives the current value of a cash flow received at a future point in time. NPV gives the effective net benefit or value of an investment, and is obtained by subtracting the costs of the investment from the present value of the cash flows generated by the investment. Opportunity cost represents the rate of return on investments of comparable risk. Application of these concepts enables you to value different kinds of assets, especially those, which are not commonly traded in well-functioning markets. The chapter also presents the economic theory behind the concepts.