Basic Present Value

Basic Present Value is a formula used in Finance that calculates the present day value of an amount that is received at a future date. The principle of the equation is that there is “time value of money”. Time value of money is the concept that receiving something today is worth more than receiving the same item at a future date. A formula is needed to provide a scientific comparison between an amount today and an amount at a future time, in terms of its Basic Present Value.