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:
“At present the globe goes with a shattered constitution in its orbit.... No doubt the simple powers of nature, properly directed by man, would make it healthy and a paradise; as the laws of man’s own constitution but wait to be obeyed, to restore him to health and happiness.”
—Henry David Thoreau (1817–1862)