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Investing Glossary:
Present value
Copyright 2009,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| The amount of Cash today that is equivalent in value to a payment, or to a stream of payments, to be received in the future. To determine the present value, each future Cash flow is multiplied by a Present value factor. For example, if the opportunity Cost of funds is 10%, the present value of $100 to be received in one year is $100 x [1/(1 + 0.10)] = $91.
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