Present value, also known as present discounted value, is the value on a given date of a payment or series of payments made at other times.
If the payments are in the future, they are discounted to reflect the time value of money and other factors such as investment risk. If they are in the past, their value is correspondingly enhanced to reflect that those payments have been (or could have been) earning interest in the intervening time. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.
Read more about Present Value: Background, Calculation, Choice of Interest Rate, Annuities, Perpetuities and Other Common Forms
Famous quotes containing the word present:
“Stevenson had noble ideas—as did the young Franklin for that matter. But Stevenson felt that the way to implement them was to present himself as a thoughtful idealist and wait for the world to flock to him. He considered it below him, or wrong, to scramble out among the people and ask them what they wanted. Roosevelt grappled voters to him. Stevenson shied off from them. Some thought him too pure to desire power, though he showed ambition when it mattered.”
—Garry Wills, U.S. historian. Certain Trumpets: The Call of Leaders, ch. 9, Simon & Schuster (1994)