Present Value Calculator

Updated: May 28, 2018

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:
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Background Information

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.
Formula

Present value = FV / (1 + r)n

Where:-

• FV = future value
• r = rate
• n = number of periods
Example
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.

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