The value today of an amount to be received in the future, based on a Compound Interest rate.
Example: At a 12% interest rate, the receipt of one dollar one year from now has a present value of $.89286 (slightly more than 89 cents). One dollar to be received in 2 years has a present value of $.79719 (under 80 cents). Factors are based on the following formula:
1
Present worth (1 factor) = ---
(1 + i)n
where i = interest rate
n = number of periods
See Table 40.
