Present value (PV)

Present value (PV),

Definition of Present value (PV):

  1. The value in the present of a sum of money, in contrast to some future value it will have when it has been invested at compound interest.

  2. Estimated current value of a future amount to be received or paid out, discounted (see discounting) at an appropriate rate, usually at the cost of capital rate (the current market interest rate). PV provides a common basis for comparing investment alternatives. Also called present worth. See also net present value, discounted cash flow, and future value.

How to use Present value (PV) in a sentence?

  1. If you know that the present value of an asset is more than the future value then it is time to get rid of it.
  2. £110 due in 12 months time has a present value of £100 today, if invested at an annual rate of 10 per cent.
  3. The present value calculation plainly indicated the profitability of the investment for us so we had to invest in our futures by accepting it.
  4. Before they started discussing sale prices, the management team wanted to verify that they had an accurate present value for every product in their inventory.

Meaning of Present value (PV) & Present value (PV) Definition