Present Value Calculator is a tool used in Finance that calculates the present day value of an amount that is received at a future date
- Present Value:
- What does Present Value mean?
- Present value is also referred to as the "discounted value". It is the current value of a future sum of money given a specified rate of return.
- Importance of Present Value
- It is used independently in many areas of finance to discount future values for business analysis. Also, it is used as a component of other financial formulas.
- Present Value Formula
Present value = FV / (1 + r)n
- FV = future value
- r = rate
- n = number of periods
- Let’s consider that a person asks you for $10,000 promising to pay it back after a period of 5 years. If we calculate the present value of that future with an inflation rate of 7%. Then, according to the above formula the Present Value is $7,129.86.
- May 13, 2018
- Tool Launched