The dollar amount of money received today that would equal the value of money received in yearly payments in the future.
Let’s say the interest rate id 5%. If you had $952 you could put it in the bank and after a year your money would have grown to $1000. If you had $907 in two years the money would have grown to $1,000. Therefore $952 + $907($1,859) are equal in value to $1,000 received every year for two years. In this case, $1,859 is the present value of this two year annuity.