Present Value (PV)

Compare with future value

A dollar you receive in the future (future value) is not as valuable as a dollar you have today. That's because the dollar you have now can be invested to earn interest. The process of converting a future dollar into a current dollar is called discounting.

\begin{align} Present Value = \frac{Future Value }{{(1+i)}^{n }} \end{align}
\begin{align} Future Value = Present Value \times {(1+i)}^{n} \end{align}

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