# Present Value - PV

- 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".This sounds a bit confusing, but it really isn't. The basis is that receiving $1,000 now is worth more than $1,000 five years from now, because if you got the money now, you could invest it and receive an additional return over the five years.

The calculation of discounted or present value is extremely important in many financial calculations. For example, net present value, bond yields, spot rates, and pension obligations all rely on the principle of discounted or present value. Learning how to use a financial calculator to make present value calculations can help you decide whether you should accept a cash rebate, 0% financing on the purchase of a car or to pay points on a mortgage.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**Present value**— is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk. Present value calculations are widely used in business and economics to… … Wikipedia**Present value**— Pres ent value or Present worth Pres ent worth (of money payable at a future date). The principal which, drawing interest at a given rate, will amount to the given sum at the date on which this is to be paid; thus, interest being at 6%, the… … The Collaborative International Dictionary of English**present value**— The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future cash flow is multiplied by a present value factor. For example, if the… … Financial and business terms**Present value**— The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. The New York Times Financial Glossary * * * present value present value also present discounted value ➔ value1 * * *… … Financial and business terms**present value**— The value at the present time of future *cash flows. The *time value of money implies that units of *money are worth more at present than in the future, owing to the erosion of monetary value caused by inflation. Present values are thereby… … Auditor's dictionary**present value**— /ˌprez(ə)nt vælju:/ noun 1. the value something has now ● In 1984 the pound was worth five times its present value. 2. the value now of a specified sum of money to be received in the future, if invested at current interest rates. Abbreviation PV… … Dictionary of banking and finance**present value**— noun also present worth : the principal of a sum of money payable at a future date that drawing interest at a given rate will amount to the given sum at the date on which this sum is to be paid at 65 interest the present value of $106 due one… … Useful english dictionary**Present Value**— Der Barwert (z. T. Gegenwartswert oder aus dem Englischen: present value) ist ein Begriff aus der Finanzmathematik . Der Barwert, ist der Wert, den zukünftige Zahlungen in der Gegenwart besitzen. Er wird durch Abzinsung der zukünftigen Zahlungen… … Deutsch Wikipedia**present value**— dabartinė vertė statusas T sritis turto vertinimas apibrėžtis Būsimos mokamos sumos ar kelių sumų vertė, diskontuota iki esamos arba kito laikotarpio pradžios dienos. atitikmenys: angl. present value šaltinis Tarptautiniai vertinimo standartai… … Lithuanian dictionary (lietuvių žodynas)**present value**— present worth (of a sum payable in the future) calculated by deducting interest that will accrue between the present and future date … English contemporary dictionary