The formula for the present value of future payments - Deepstash
The Foundations of A Successful Investment

The Foundations of A Successful Investment


Keep reading for FREE

The formula for the present value of future payments

The formula for the present value of future payments

PV= FV / (1+i)n


PV=Present value 

FV=Future value

i=Interest rate 

n=Number of years.


122 reads

Factors To Consider In Your Decision

Factors To Consider In Your Decision

Choosing the investment with the highest interest rate (returns rate) is viable but this doesn’t work in all cases, because it might be difficult to estimate the return rates on all available options.

The length of time it takes for each investment to pay their respective returns should also be considered, among other factors like cost of investments, industry differences, the possibility of other cash inflows or compounding interest and any non-quantitative factors.


57 reads

How Is This Applied?

How Is This Applied?

The time value of money rule is:

"Money received today is worth more than that same amount received in future."

The time value of money is used to guide investment decisions. Before you invest, you want to know which of the options before you promises the highest profits in today’s value. To do this you would grade your investments using either of these time value factors depending on your exact situation.

  1. Present value
  2. Future Value


90 reads

The Foundations of A Successful Investment

The Foundations of A Successful Investment

Investment in its most simple form means “using an asset you own to generate future profits” and assets don’t always mean money; sometimes it could be time, effort, or a property you own.

With this perspective, we can consider two school kids pledging portions of their lunches to each other as a crude form of investment.

As for profits, it is up to you to define what is acceptable to you, based on the alternatives that surround you. For skilled investors, this is where using the time value of money comes in.


113 reads

Interest rates

Interest rates

Interest rates used in the present value or future value formula can also be called discount rate. When considering an investment, it is appropriate to use the opportunity cost of putting your money elsewhere as your interest rate.

This is calculated as:

Opportunity Cost = FO−CO


FO= Forgone option

CO= Chosen option​


87 reads

1. Present value

1. Present value

Calculating the present value of money answers the question;

If an investment promises to pay me a certain amount in future, how much is that sum worth today?


98 reads

2. Future Value of money

2. Future Value of money

This answers the questions:

I have a certain amount in hand today, how much is it worth in future?


101 reads

What You Have Learnt

What You Have Learnt

  • The time value of money is vital in making business decisions
  • The present value of money can be used to estimate what the profit of your investment is worth in today’s terms.
  • Discount rates or interest rates can be determined by considering what return you’ll get from another investment
  • And I may or may not have been a middle school business mogul with my lunch. You’ll never know.


61 reads



Writer, artist, Accountant and a forever learner. Learning, loving, Hoping.

These ideas explain the importance of time value considerations in making investment decisions.


Investment Tips for Beginners

Investment Tips for Beginners

How Much Money Can You Make Investing in Stocks?

How Much Money Can You Make Investing in Stocks?



Ready for the next level?

Read Like a Pro


Explore the World’s

Best Ideas

200,000+ ideas on pretty much any topic. Created by the smartest people around & well-organized so you can explore at will.

An Idea for Everything

Explore the biggest library of insights. And we've infused it with powerful filtering tools so you can easily find what you need.

Knowledge Library

Powerful Saving & Organizational Tools

Save ideas for later reading, for personalized stashes, or for remembering it later.

# Personal Growth

Take Your Ideas


Organize your ideas & listen on the go. And with Pro, there are no limits.

Listen on the go

Just press play and we take care of the words.

Never worry about spotty connections

No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.

Get Organized with Stashes

Ideas for your next work project? Quotes that inspire you? Put them in the right place so you never lose them.


2 Million Stashers



5,740 Reviews

App Store



72,690 Reviews

Google Play

Sean Green

Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.

Ashley Anthony

This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!

Shankul Varada

Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.


Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.

Jamyson Haug

Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.

Laetitia Berton

I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!

Giovanna Scalzone

Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.

Ghazala Begum

Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.

Read & Learn

20x Faster





Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving & library

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Personalized recommendations


Claim Your Limited Offer

Get Deepstash Pro


75% OFF | 1-Year Pro Subscription

Claim Offer