The discounted value, also called PDV (Present Discounted Value), converts a future amount of money into the present value at a certain interest rate.
Discounted value
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The discounted value, also called PDV (Present Discounted Value), converts a future amount of money into the present value at a certain interest rate.
In layman's terms, the discounted value refers to the value of a future asset or liability converted to the present. This takes into account the time value of cash or asset points at two points in time. This means that the same amount of money is ahead of time and has great value.
- Name
- Discounted value
- Name
- Present Discounted Value
- Short name
- PDV
- Definition
- Converting future money at a rate
Discounted value (present discounted value, PDV / discounted present value / discount value)
Overview of discounted value
Let s start with an analogy: I plan to deposit some money in the bank now,
Present Discounted Value (PDV): Xt = Yt + 1/1 + i is the PDV of Yt + 1
1.Xt represents the money equivalent in today's dollars of the future amount, Yt + 1
Xt represents the value of the future amount
2.A market determined rate of intertemporal rate of exchange
Market decides exchange rate over time
