PMP Certification Formulas: Present Value


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Present Value


$Present Value$ or $PV$ is the value of the investment in today’s terms. It is the value of future cash flows of the project in today’s dollars.

Formula

\begin{equation} PV=\frac{FV}{(1+r)^n} \end{equation}

Where:

$PV$=Present Value

$FV$=Future Value

$r$=interest rate

$n$=number of years for the project

Explanation

  • The result: amount of money to invest today ($PV$) for $n$ years at $r\%$ interest in order to end up with the target sum ($PV-FV$)
  • The bigger the better.

Source: Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th ed. Newtown Square: Project Management Institute.

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