Finance
Present Value (PV)
The current worth of a future sum of money or cash flows, discounted at a specific rate. A core concept in finance: $1 today is worth more than $1 in the future due to its earning potential.
Present value captures a simple truth: money available sooner is worth more because it can be invested. Discounting future cash flows to today lets you compare amounts that arrive at different times on an apples-to-apples basis — the engine behind bond pricing and NPV.
Key Formula & Relationship
PV = FV / (1 + r)^n = Σ [CF_t / (1 + r)^t]
Reviewed by the Calculover Editorial Team for mathematical and practical accuracy.
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