How much do we have to invest today to receive $100 one year from today? Suppose PV is the Present Value (the value today) of $100 received one year from now and suppose r is the interest rate we can expect to earn. Then PV is just the amount we need to invest today at interest rate r to have $100 in a year or:

    It turns out that the amount of money we must invest today to receive $100 one year from today is simply $100 divided by 1 + r.

    The PV of any amount R to be received in one year is simply that amount divided by 1 + r.

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