present value [PV]

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Tags: finance

Today’s value for income to be received in the future.

Two factors affect the analysis:

  • the perceived risk that one might receive nothing at all in the future, or a smaller amount than expected.
  • the potential income from alternative investments that could be purchased if one were paid the present value for a future income stream (discounting is the mathematical calculation used to arrive at present value).

(source: thefreedictionary.com )

Synonyms:
net present value - npv
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