Present value

Financial Analysis in Power BI

Nick Edwards

Capital Markets Analyst

Present value (PV)

Present value is the current value of money that will be received in the future.

  • "How much do I need to invest today to have the equivalent of the future value by the end of the time period?"
  • Referred to as "discounting"

Present value is the future value divided by 1 plus the interest rate divided by number of compounding periods to the power of years multiplied by the number of compounding periods.

Example: Find the present value of $500,000 ten years from now at a 20% discount rate that compounds weekly.

  1. PV = FV/(1+i/n)^(y*n)
  2. PV = $500,0000.00/(1+0.2/52)^(10*52)
  3. PV = $500,0000.00/(1.00385)^520
  4. PV = $500,0000.00/7.36
  5. PV = $67,927.73
Financial Analysis in Power BI

Annuities

Shows an annuity cash flow structure of $500 every year for four years. To find the present value of an annuity, sum up the present value of each cash flow.

Financial Analysis in Power BI

Annuities

Shows an annuity cash flow structure of $500 every year for four years. To find the present value of an annuity, sum up the present value of each cash flow.

Financial Analysis in Power BI

Annuities

Shows an annuity cash flow structure of $500 every year for four years. To find the present value of an annuity, sum up the present value of each cash flow.

Financial Analysis in Power BI

Annuities

Shows an annuity cash flow structure of $500 every year for four years. To find the present value of an annuity, sum up the present value of each cash flow.

Financial Analysis in Power BI

Annuities

Shows an annuity cash flow structure of $500 every year for four years. To find the present value of an annuity, sum up the present value of each cash flow.

Financial Analysis in Power BI

Let's practice!

Financial Analysis in Power BI

Preparing Video For Download...