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# Present value

AnalyticsTrade Team Last updated on 26 Apr 2023

# Present Value

Present value is a financial term used to describe the current value of a future sum of money or stream of cash flows given a specified rate of return. It is used to compare the value of money today to the value of money in the future, taking into account inflation and other factors. Present value is used to determine the value of an investment today, given the expected returns in the future. It is also used to compare the value of different investments and to determine the cost of capital.

## History of Present Value

The concept of present value was first introduced by Italian mathematician and economist Leonardo Fibonacci in the 13th century. He used the concept to calculate the value of annuities and other investments. The concept was further developed by French mathematician and economist Antoine Augustin Cournot in the 19th century. Cournot used the concept to calculate the value of a future sum of money given a specified rate of return. The concept of present value has since been widely used in finance and economics.

## Comparison Table

Year Present Value Future Value
2020 \$100 \$110
2021 \$90 \$110
2022 \$80 \$110

## Summary

Present value is a financial term used to describe the current value of a future sum of money or stream of cash flows given a specified rate of return. It is used to compare the value of money today to the value of money in the future, taking into account inflation and other factors. Present value is used to determine the value of an investment today, given the expected returns in the future. More information about present value can be found on websites such as Investopedia, The Balance, and Investing.com.

• Future Value
• Discount Rate
• Net Present Value
• Internal Rate of Return
• Annuity
• Compound Interest
• Time Value of Money
• Inflation
• Risk-Free Rate
• Cash Flow