Finance & Interest
Basic

Present Value

Present worth of a future sum.

Formula

PV=FV(1+r)nPV = \frac{FV}{(1 + r)^n}

Variables

FVFuture value
rRate
nPeriods

Example

To have $1000 in 5 years at 5%, invest 1000/1.05⁵ ≈ $783.53 today.

Did You Know?

Present value discounts future cash back to today — the foundation of valuing any investment.

valuationpresent value