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:
“Those who wander in the world avowedly and purposely in pursuit of happiness, who view every scene of present joy with an eye to what may succeed, certainly are more liable to disappointment, misfortune and unhappiness, than those who give up their fate to chance and take the goods and evils of fortune as they come, without making happiness their study, or misery their foresight.”
—Frances Burney (1752–1840)