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how is present value calculated. Then indicate the number of years before you will receive the payment. Finding the amount you would need to invest today in order to have a specified balance in the future.
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The easiest and most accurate way to calculate the present value of any future amounts single amount varying amounts annuities is to use an electronic financial calculator or computer software. Finding the amount you would need to invest today in order to have a specified balance in the future. First enter the payments future value and its discount rate.
PV is defined as the value in the present of a sum of money in contrast to a different value it will have in the future due to it being invested and compound at a certain rate.
All you need to provide is the expected future value FV the discount rate return rate per period and the number of periods over which the value will accumulate N. Present Value 96154 92456 88900 85480 Present Value 362990 Therefore the present day value of Johns lottery winning is 362990. For example the cashflow of -250000 in the first year leads to same present value during the year zero. In simple terms it compares the buying power of one dollar in the future to the purchasing power of one dollar today.
