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Present Value of Future Money

Present value is the current value of the future sum of money, at a specified rate of return. The future cash flows would be discounted.

Present Value
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Frequently Asked Questions

Q A
What is Present Value?

Present value is the current value of the future sum of money, at a specified rate of return. The future cash flows would be discounted. The higher the discount rate, the lower is the present value of the future cash flows. The lower the discount rate, the higher would be the present value of future cash flows. You must determine the appropriate discount rate for valuing future cash flows.

The present value tells you if a sum of money today is worth more than the same amount in the future. The present value shows you that the money you receive in the future is not worth the money you receive today.

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