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:
“In the moment when you make the least petition to God, though it be but a silent wish that he may approve you, or add one moment to your life,—do you not, in the very act, necessarily exclude all other beings from your thought? In that act, the soul stands alone with God, and Jesus is no more present to your mind than your brother or your child.”
—Ralph Waldo Emerson (1803–1882)