Financial Markets

Present Value PV (aktueller Wert)

Compare the cash-flows that take place at different point in time 
 
=> move the cash-flows with interest rate i to concrete point in time 
 
e.g. 
 
i = 0.1
 
t       0       1       2
$             100   100
 
PV = (100 / 1 + 0.1) + (100 / (1+0.1)²) = 173.55
 
=> discounted value of future cash-flows at given rate i 

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