Present Value

This refers to the calculation of future costs or income at current values.

Present Value is used in decision making to reflect the impacts of inflation, loss/gain in interest etc on future costs and revenues by applying a Discount Factor to the future values; the discount factor will vary depending on both the business’s specific circumstances and broader macroeconomic circumstances.

Present Value is a term normally found in economics and financial management; explore our learning resources to discover more. Explore our learning zone to discover more