Present Value
The Present Value of money in the future
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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