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Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return. It's the value today of an amount of money in the future. For example, if the appropriate interest rate is 10 percent, then the present value of $100 spent or earned one year from now is $100 divided by 1.10, which is about $91.
The higher the discount rate, the lower the present value of the future cash flows. This concept is used in the valuation of stocks, bond pricing, and real estate.

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