Present value (PV),
Definition of Present value (PV):
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.
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?
- 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.
- £110 due in 12 months time has a present value of £100 today, if invested at an annual rate of 10 per cent.
- The present value calculation plainly indicated the profitability of the investment for us so we had to invest in our futures by accepting it.
- 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