MONEY and BANKING LECTURE NOTES LOW GRAPHICS

 

PRESENT VALUE

The present value (PV) is the today's value
of the  amount  X that is to be
 obtained
after t years in future, assuming that
the discount rate is
r

PV  =  X /(1 + r)t

Note, that Present Value is just inverse of Future Value.
Be aware that time t is now counted in reverse
from future to present.
Read student's story about importance of knowing
the present value formula.

 

 

 PRESENT VALUE
 

 

 

 

 

 

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