How To Calculate Present Value?

Identify the future cash flow amount

Determine the discount rate

Determine the time period until payment

Use the present value formula: PV = FV / (1 + r)^n

Divide the future value by one plus the discount rate raised to the number of periods

If there are multiple cash flows, calculate the present value of each one separately

Add all discounted cash flows together to get total present value

Suggested for You

Trending Today