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Present Value.

PV is the dollar amount of money received today that would equal the value of money received in the future. Let’s say the interest rate id 5%. If you had $1000 you could put it in the bank and after a year your $1000 would have grown to $1050. Therefore $1000 received today is equal in value to $1050 received in a year. In this case, $1000 is the present value of $1050.

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