Financial management ip2 | Business & Finance homework help
Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return. Future value is the value that a present amount invested at a given interest rate will be worth in the future.
Present value reflects the time value of money, which states that an amount received today is worth more than an equal amount received at some point in the future due to its potential earning capacity over time. Future values thus represent the compounded effect of investing funds over time and are used to calculate returns on investments.