The current value of a future cash flow or sum of money, adjusted for the time value of money and potential interest or investment returns.
Present Value refers to the current worth or value of future cash flows or financial obligations, discounted at a specified interest rate. It helps small business owners evaluate the value of expected future income or expenses in today's terms. By discounting future amounts, small business owners can make informed decisions about investments, loans, or other financial transactions, taking into account the time value of money and potential risks. Calculating the present value enables businesses to assess the profitability and feasibility of projects, assess investment opportunities, and make strategic financial decisions for their company's growth and stability.