Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in a future period. ...
Present Value Factor
The value that an amount of money that is going to be paid at a later date is multiplied to determine the current value of the money.
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present value factors
Factors that are used to convert future cash flows to their present value.
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present value factor
discount interest rate factor used to determine the present value of a sum in the future. The present value equation is:
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Present Value Factor: A factor used to calculate the present value of an amount to be received at a future point in time. If the opportunity cost of funds is 10% over next year, then the present value factor is equal to 0.909 [= 1 / (1 + 0.10)].
To determine the present value, each future cash flow is multiplied by a present value factor. For example, if the opportunity cost of funds is 10%, the present value of $100 to be received in one year is $100 x [1/(1 + 0.10)] = $91.
Carefully consider the mathematics (or table values), and observe that higher interest rates produce lower present value factors, and vice versa. Thus, the logic of making certain investments changes with interest rates.
Alternatively, you could use the Present Value of an Annuity Table (C-2) and look up the present value factor for 10% and 3 years. That factor is 2.48685.
present value factor equal to the formula 1/(1 - r)n, where n is the number of years from the valuation date to the cash flow and r is the discount rate.
For business valuation, n should usually be midyear, i.e., n = 0.5, 1.5, . . .
 See also: Net present value, Expense, Banks, Values, Surrender value
  
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