Compute the discount factor that converts a future cash flow to its present value.
Net Present Value
?
Present value of future cash flows minus the initial investment.
$2,487
at 10% discount rate
| Period | Years | DF | CF | PV |
|---|---|---|---|---|
| 1 | 1.0000 | 0.9091 | $1,000 | $909 |
| 2 | 2.0000 | 0.8264 | $1,000 | $826 |
| 3 | 3.0000 | 0.7513 | $1,000 | $751 |
Data view
Present-value decay across periods at the current discount rate.
Present value decay bar chart: period 1 $909, period 2 $826, period 3 $751