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Present Value

The value of money in the future is the Present Value.

The value of money in the future can be calculated to Present Value or Present Worth with the "discount rate" as

P = F / (1 + i)n         (1)


F = future cash flow (positive for receipts, negative for disbursements)

P = present value

i = discount rate

n = number of interest periods

The factor "1 / (1 + i)n" is known as the "single payment present worth factor".

Present Value - Online Calculator

Example - Present Value

The present value of a future cash flow of 7 in period 10 with discount rate 5% (i = 0.05) can be calculated as

P = (7) / (1 + 0.05)10

    = 4.30

Related Topics

  • Economics

    Engineering economics - cash flow diagrams, present value, discount rates, internal rates of return - IRR, income taxes, inflation.

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