MathLivePresent value of a future sum
Gives the value today of a payment to be received n periods in the future, discounted at the interest rate r per period. It is used in finance and investment appraisal to compare cash flows occurring at different times.
PV=\frac{FV}{(1+r)^{n}}What the symbols mean
| present value, the amount today (in currency units) | |
| future value, the amount received in the future (in currency units) | |
| discount or interest rate per period | |
| number of periods until the payment |
About this formula
- FieldEconomics and finance
- TopicTime value of money
- LevelHigh school
- Also calledpresent value formula, discounting formula, present value, discounted value, time value of money present value
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