Present Value

Definition: Current monetary value of an asset. Sense of the current value of future economic benefits using the discounted value of aggregate future income. Definition: [crh] The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future Definition: cash flow is multiplied by a present value factor. For example, if the opportunity cost of funDefinition: ds is 10%, the present value of $100 to be received in one year is $100 x [1/(1 + 0.10)] = $91.

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