Present Value is the value on a given date of a future payment, discounted to reflect the time value of money and other factors such as investment risk. As you can find in some investment opportunities offering, present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful “like to like” basis.
This present value or pv calculator consists of three worksheets. The first worksheet is a tool to calculate present value based on interest rate, period and yearly payment. For example, if you want to calculate your profit between an investment offering where you have to invest USD 10,000 for 4 years with USD 3500 payment to you per year and 12% bank interest rate annually. The result shows you that the present value of your money is higher than your current money. So, the investment is profitable for you because it give interest more than your bank.
The second worksheet has the same example with the first one, except the payment of your borrowed money for investment will be paid only once by the end of 4 year period, with amount USD 14,000. The result reveals that the value of your money is less than the value of your current money. So, it is not profitable. Don’t be tempted with the absolute different (14,000 – 10,000) because if you put your money in bank, the value after 4 years will be more than USD 14,000.
The third worksheet is a pv comparator tool which will compare side by side the investment of your money calculated in the first and the second worksheet.
But, this is just a standard tool with general assumption. Use this calculator as your side reference only, because any investment proposal shall give different calculation method than this calculator.
