Before learning what is the present discounted value formula, let us recall what is a discount. Discount refers to the price lower than the actual price of the commodity. The present discounted value formula is used to find the present discount value against a particular future amount received in a year from the current date.
What is the Present Discounted Value Formula?
The present discounted value formula is represented in terms of the future value, rate of return, and the number of periods. It is given as:
PV = present value
FV = future value
R = rate of return
n = number of periods
Let us see the applications of the present discounted value formula in the following section.
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