Present Value

This tool has been designed for information purposes only. Actual results may vary depending on various factors involved in capital market. Investor should not consider above as a recommendation for any schemes of HDFC Mutual Fund. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

• Definition: Present Value (PV) is the current value of a future sum of money or stream of cash flows, given a specified rate of return. It reflects the time value of money, which means that a sum of money today is worth more than the same sum in the future due to its potential earning capacity.
   

• Purpose: A Present Value Calculator helps determine the current worth of a future amount of money or a series of cash flows, considering a specific rate of return (discount rate) and the number of periods.
   

• Input Parameters:

• Future Value (FV): The amount of money in the future.
• Discount Rate (r): The rate of return or interest rate.
• Number of Periods (n): The time period over which the money will be invested or discounted.

• Calculation Process:

• The calculator uses the formula:  
  
   
   
• This formula discounts the future value back to the present value by accounting for the rate of return over the specified periods.

• Steps:

• Enter Future Value (FV): Input the amount of money you expect to receive in the future.
• Enter Discount Rate (r): Input the expected rate of return or interest rate.
• Enter Number of Periods (n): Input the number of periods (years, months, etc.) over which the money will be invested or discounted.
• Calculate: Click the calculate button to get the present value.

• Definition: Present Value (PV) is the current worth of a future sum of money or cash flows, discounted at a specific rate of return. It reflects the time value of money.
   

• Calculation: PV is calculated using the formula:  

•  Factors: Future value (FV), discount rate (r), and number of periods (n).
   

• Importance: PV helps investors determine the value of future cash flows in today's terms, aiding in comparing investment opportunities and making informed financial decisions.
   

• Difference:

• Present Value (PV): The current value of a future sum of money or cash flows.
• Future Value (FV): The value of a current sum of money or cash flows at a specified date in the future, considering a specific rate of return.