Considering selling your car to buy a new one? Buying a new refrigerator? Trying to work out how best to save for retirement?

A new book by U.S. actuary Peter Neuwirth could help make all those decisions, and more, by offering a guide to the concept of “present value.”

In the book, “What's Your Future Worth?,” the retirement actuary at Towers Watson & Co. says while present value techniques cannot predict the future, they can help simplify and evaluate outcomes that could arise from choosing one path over another.

The book is filled with examples of decisions both big and small that have been helped by systematically considering both the present and the future to make “apples to apples comparisons.”

Mr. Neuwirth describes how when his favorite running shoe was discontinued by the manufacturer and put on a half-off sale, he was faced with deciding how many pairs to buy.

Bearing in mind that this was his favorite shoe that, after the current stock was exhausted, he never would be able to buy again; that it was being sold at a good price; that he would make a financial outlay for something he might not use for some time; where to store the shoes; and whether other manufacturers might in time come up with a comparable shoe, Mr. Neuwirth went through a five-step process to determine how many pairs to buy at half price. Numbers can be assigned to the various options.

Those five steps, which can be applied to all types of decisions, were:

• Define the choices to be made.

• Imagine all (or as many as possible) potential outcomes that might arise from each choice, focusing not just on what could happen but on when it could happen.

• Evaluate, to the extent possible, the relative likelihood of each possible future.

• Introspect in detail how much more value should be placed on things that will happen in the near future vs. things that will happen in the distant future.

• Sum the values of the consequences of each choice to determine the present value of each alternative.

Mr. Neuwirth bought four pairs of his favorite running shoes — a good decision, he says. While that was not enough to last him a year until a new shoe that he liked as much was released by another manufacturer, the four-pair purchase was not so much that he felt he had spent too much or created a storage problem.

Present value techniques can be used to make big decisions, such as where to book a dream holiday, and even bigger ones, such as changing jobs or investing in education, Mr. Neuwirth contends.

And the book aims to make the concept of present value simple enough for nonactuaries to follow.

Now, shall I have that second cup of coffee now or later?