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:
“The reverence for the deeds of our ancestors is a treacherous sentiment. Their merit was not to reverence the old, but to honor the present moment; and we falsely make them excuses of the very habit which they hated and defied.”
—Ralph Waldo Emerson (1803–1882)