What a future amount is worth today at a given discount rate.
$100,000 in 15 years is not $100,000 — at a 6% discount rate it is worth about $41,700 today. Present value is the lens for pensions, settlements, and any promise of future money.
Formula: PV = FV ÷ (1+r)^t
Example: PV of $100,000 in 15 years at 6% ≈ $41,727.
FAQ
What is Present Value in simple terms?
$100,000 in 15 years is not $100,000 — at a 6% discount rate it is worth about $41,700 today. Present value is the lens for pensions, settlements, and any promise of future money.
How is it calculated?
PV = FV ÷ (1+r)^t. Example: PV of $100,000 in 15 years at 6% ≈ $41,727.