Definition of present value (worth)

today's value of a future payment, or stream of payments, discounted at some appropriate compound interest, or discount, rate; also called time value of money. The present value method, also called the discounted cash flow method, is widely used in corporate finance to evaluate a proposed capital investment project or to measure the expected return. In security investments, the method is used to determine how much money should be invested today to result in a certain sum at a future time. Presentvalue calculations are facilitated by present-value tables, which are compound interest tables in reverse.