PRESENT VALUE

MANUAL OF FINANCIAL CONCEPTS

PRESENT VALUE

It is the present value of an investment to be received in the future. From the formula of the future value, we can calculate the present value, by doing the following:

PV = FV / (1+i)^n

Whereas:

FV: Future value of the investment.

n: Number of years of the investment (1,2,…,n).

i: Annual interest rate.

PV will be higher with a lower value of i and n.

Example of PV calculation:

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