Present Value Financial Glossary

What is it? Definition Value of future cash flows as if they were available today. A simple example is that an individual might be willing to receive $100 per year for the next ten years for a total of $1,000 as an alternative to receiving $600 (the present value of $1,000) today. The $600 is less than the total of $1,000, but it is a bird in the hand - and the investor doesnt have to wait for ten annual payments. Buying or selling a business is much the same way. What are you willing to pay or receive now for a company in exchange for its future cash flows?

Finance Term Definition Added By: Gabrielle

The Present Value definition has been viewed 1772 Time(s)!

Send To Friends!

If you'd like to send the Present Value definition to yourself or to your friends/colleagues, just enter the e-mail addresses in the boxes below -

We hope you now understand the meaning of Present Value. If you need any more information on this term, please don't hesitate to contact us.

Other Similar Finance Terms:

Financial Term Adjustable Rate Mortgage (ARM) is A mortgage loan in which the interest rate is subject to periodic adjustment up or down according to the movement of a pre-arranged index - such as the Cost of Funds Index or an institutions cost of providing savings accounts (see Interest Rate, Index, Fixed Rate Mortgage, Cost of Funds Index).

Financial Term Recourse facility is Advance of finance against unpaid outstanding invoices in which the credit risk remains with the company. You would have to pay back advances in the event of bad debts (see also Non-recourse).

Financial Term Marketing is The process of identifying and communicating with qualified prospects.

Financial Term Patient Capital is Investors interested in long-term value maximization.

Financial Term IFA is Independent Financial Adviser - an independent expert who is authorised to sell or advise on the policies offered by insurance companies, as well as other financial service providers, such as banks and building societies.