Definition, Meaning & Synonyms

present-value-of-future-cash-flows

financial term

ˈprɛzənt ˈvælju ʌv ˈfjʊtʃər kæʃ floʊz

Definition

The present value of future cash flows is a financial concept that represents the current worth of a stream of cash flows expected to be received in the future, discounted at a specific interest rate.

Examples

When evaluating investments, it’s essential to calculate the present value of future cash flows to determine if they are worth pursuing.
The present value of future cash flows helps businesses make informed financial decisions about projects.
To calculate the present value of future cash flows, one must know the expected inflows and the discount rate.