Series 79: 3.5.9.1. Present Value

3.5.9.1. Present Value

The concept of present value is the reverse of the concept of future value. Instead of trying to figure out what something will be worth in the future, present value calculates what the value of a future amount is today.

Calculating present value of something is not much different from calculating the future value of something, except that you use division instead of multiplication. Note also that “principal” has been relabeled “present value.” The formula for calculating the present value of a single sum to be received or