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The Present Value (PV) of a Payment N Years in the Future

question 26

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The present value (PV) of a payment n years in the future (FV) , given an interest rate (r) , is given by the equation:


Definitions:

Past Consideration

Anything given or promised to be given in the past, which cannot be considered valuable in the context of forming a current contract.

Law of Consideration

A principle in contract law that requires an exchange of something of value between the contracting parties.

Specific

Clearly defined or identified; particular and distinct.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to a second party if the latter has reasonably relied on that promise.

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