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:
“I will venture to affirm, that the three seasons wherein our corn has miscarried did no more contribute to our present misery, than one spoonful of water thrown upon a rat already drowned would contribute to his death; and that the present plentiful harvest, although it should be followed by a dozen ensuing, would no more restore us, than it would the rat aforesaid to put him near the fire, which might indeed warm his fur-coat, but never bring him back to life.”
—Jonathan Swift (1667–1745)