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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