GAO Glossary of Terms and Definitions (September 2005)

Present Value

(Economics Term)

The worth of a future stream of returns or costs in terms of money paid immediately (or at some designated date). (Differs from Net Present Value.) A dollar available at some date in the future is worth less than a dollar available today because the latter could be invested at interest in the interim. In calculating present value, prevailing interest rates provide the basis for converting future amounts into their “money now” equivalents. (See also Discount Rate; Net Present Value.)

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