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Estimated current value of a future amount to be received or paid out, discounted (see discounting) at an appropriate rate, usually at the cost of capital rate (the current market interest rate). PV provides a common basis for comparing investment alternatives. Also called present worth.
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Simply :- PV = CF/(1+r)n
It means how much money worth today
In economics, present value, also known as present discounted value, is the value of an expected income stream determined as of the date of valuation.
The current worth of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows. Determining the appropriate discount rate is the key to properly valuing future cash flows, whether they be earnings or obligations.
Also referred to as "discounted value".
Present Value(PV)
It is the modern method of evaluating investment that takes into account time value of money.
The term PV is simply called Present value of future found. It is the amount of cash today that is equivalent in value to a payment or to a stream of payments to be received in future.
Formula for Calculation PV = CF/(1+r)n
PV value of money is important in calculating Bond yields, the value of annuities, and many other transactions.
present value noun the current capital value of a future income or outlay or of a series ofsuch incomes or outlays. It is computed by the process of discountingat a predetermined rate of interest
Present value is the current value of expected income streams
present value of fund is the present value of future fund
Amount value at present time which equalise for series of future amount.
