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Social Sciences
Finance
1907
Beginner

Present Value Formula

PV=FV(1+r)nPV = \frac{FV}{(1 + r)^n}

Future money is worth less today—discounted by interest rate and time.

By Irving Fisher, Various

Social Sciences
Present Value Formula
1907 · Irving Fisher
Why it matters: Foundation of investment analysis, pensions, and all of finance.

Discoverers: Irving Fisher, Various (1907)

What does it mean?

Future money is worth less today—discounted by interest rate and time.

Why should I care?

Foundation of investment analysis, pensions, and all of finance.

Variables & Units

SymbolNameUnitMeaning
PVPVPresent value—Today's value
FVFVFuture value—Future amount
rrDiscount rate—Interest rate per period
nnPeriods—Number of compounding periods

Worked Example

$1000 in 10 years at 5% → PV = $613.91.

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Sources & further reading

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Equation Universe

Present Value Formula

PV=FV(1+r)nPV = \frac{FV}{(1 + r)^n}

Real-world impact

Global economy

Quantitative models shape markets and policy.

Photo: Unsplash — financial markets

Future money is worth less today—discounted by interest rate and time.

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