Present value means the value today of a future payment or stream of payments discounted at a specific interest rate.

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Present value is a financial concept that calculates the current worth of a future sum of money or stream of cash flows given a specified rate of return. This calculation accounts for the time value of money, which posits that a dollar today is worth more than a dollar in the future due to its potential earning capacity.

Present Value Means the Value Today of a Future Payment