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The value of future money can be calculated to present worth or present value with the "discount rate" as

P = F / (1 + i)ⁿ         (1)

where

F = future cash flow (positive for receipts, negative for disbursements)

PV = present value

i = discount rate

n = number of interest periods

The factor "1 / (1 + i)ⁿ" is known as the "single payment present worth factor".

Present Value - Online Calculator

F - single future cash flow

i - discount rate (%)

n - number of periods

Example - Present Value

The present value of a future cash flow 1 in period 10 with a discount rate 5% can be calculated as

P = 1/ (1 + 5/100)¹⁰

    = 0.61

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Related Topics

• Economics - Engineering economic concepts - cash flow diagrams, discount rate, internal rate of return - IRR, income taxes, inflation

Related Documents

• Cash Flow Diagrams - Time and value of future money
• Compound Interest Tables - Compound interest tables - Interest ranging 0.25 - 60%
• Discrete Compounding Formulas - Discrete compounding formulas with discrete payments
• Interest Formulas - Single cash flow formulas
• Interest Rate - The cost of money
• Internal Rate of Return - IRR - Internal Rate of Return - IRR - the project break-even interest rate
• Net Present Worth - NPW - of a Stream of Payments - Net Present Worth - NPW - or Value of a stream of payments