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Present Value

What is a Present Value?

A Present value is where we have a sum of money in the future and we want to know what it would be worth in today’s dollars.

The future value of a sum is what a sum invested now will be worth in the future. This assumes the sum is invested at a nominated interest rate.

Because we could invest the sum now at todays interest rates the present value is less than the future value.

Finally this infographic below shows the difference.

What is present value?

Learn more on this complicated topic with these free resources.