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present value

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Financial Dictionary

Present Value - PV

The amount that a future sum of money is worth today given a specified rate of return.

Investopedia Commentary

This sounds a bit confusing, but it really isn't. An investment that earns 10% per year and can be redeemed for $1000 in five years would have a present value of $620. In other words, $620 today is worth $1000 in five years.

Related Links

Understanding The Time Value Of Money

See also: Future Value, Internal Rate of Return (IRR), Net Present Value (NPV), Time Value of Money

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