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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

Present value  

Definition 1.

The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future cash flow is multiplied by a present value factor. For example, if the opportunity cost of funds is 10%, the present value of $100 to be received in one year is $100 x [1/(1 + 0.10)] = $91.
 

Definition 2.

The current value of one or more future cash payments, discounted at some appropriate interest rate.
 
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