Present value (PV) is the current ... $1,000 in hand today should be worth more than $1,000 five years from now because it can be invested for those five years and earn a ... Present Value Formula ...

Present value tells you the current worth of a future sum of money. Future value gives you the future value of the cash that you have now. Say someone asks you which would you prefer: $100,000 ...

The formula for perpetual annuities takes a simpler form: Present Value = Payments / Interest Rate In the previous example, an infinite number of payments with a 2.4 percent inflation rate produce ...

The first step is to subtract the present value from the future value to determine the actual cash return we'll receive over this period. In this case, that works out to $100.

Present Value of a Growing Perpetuity The formula above is for the simplest form of perpetuity – one that assumes a constant interest rate and a constant cash flow.