Present Value (PV)
✓ Last verified 14 Sep 2026
The short version
Present Value is what a future sum of money is worth today, once you account for the returns that money could have earned in the meantime.
₹1,10,000 received exactly one year from now, discounted at 10%, has a Present Value of ₹1,00,000 today - because ₹1,00,000 invested today at 10% would grow into exactly ₹1,10,000 in a year. This is why '₹1 lakh today' and '₹1 lakh in 5 years' aren't the same offer, even though the number is identical - the one available today can start earning returns immediately. Present Value is the building block behind Net Present Value, loan and insurance payout comparisons, and any decision that involves comparing cash flows that arrive at different points in time.
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