Present value (P)
—
- P
- present value
- F
- single future payment
- i
- discount rate per period
- n
- number of periods
Worked example · $100 arriving in 7 periods at 5% is worth $71 now.
Eq.02 · Single payment
Present Worth
Takes an amount promised at some future period and shrinks it back to what it is worth in today's money.
P = F (1 + i)^-n