Definition: The value today of money expected in the future, calculated using an appropriate discount rate and timing assumptions.
Example
At a 5% annual discount rate, $1,050 received one year from now has a present value of $1,000.
Keep the distinction clear
Present value accounts for the time value of money. A projected receipt is not guaranteed, and a different discount rate or payment date changes the result.
Related terms
Discount Rate · Investment Value · Yield
Keep studying
Income Approach: NOI, Cap Rate, Property Value, and Cash-on-Cash Return
References: FREC Course II syllabus: investment concepts
Pronunciation (US): PREZ-unt VAL-yoo (capitals show stress)
Pronunciation reference: Merriam-Webster
Comments
0 comments
Article is closed for comments.