The present value (P₀) of any payment to be received n periods from now is:

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The present value (P₀) of any payment to be received n periods from now is calculated using the formula P₀ = Pn/(1+r)ⁿ, where Pn is the future value of the payment, r is the interest rate, and n is the number of periods. This formula takes into account the time value of money, which means that money received in the future is worth less than money received today due to inflation and the opportunity cost of investing that money elsewhere. Therefore, to calculate the present value of a future payment, we need to discount its future value to account for the time value of money.

The Present Value (P₀) of Any Payment to Be Received