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:
“A book is not an autonomous entity: it is a relation, an axis of innumerable relations. One literature differs from another, be it earlier or later, not because of the texts but because of the way they are read: if I could read any page from the present time—this one, for instance—as it will be read in the year 2000, I would know what the literature of the year 2000 would be like.”
—Jorge Luis Borges (1899–1986)