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)

where

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

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• Engineering ToolBox, (2008). Present Value. [online] Available at: https://www.engineeringtoolbox.com/discount-rate-d_1232.html [Accessed Day Mo. Year].

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