What is the definition of present value? a. the future value of a current sum of money b. the current value of a future sum of money c. the interest paid on a future sum of money d. the interest paid on a current sum of money

The current value of a future sum of money. The Present Value allows us to calculate what is the value of today that has an amount of money that we will not receive right now but later, in the future.

Present value seeks to reflect that it is always better to have an amount of money today than to receive it in the future. In fact, if we have the money today we can do something to make it productive, such as investing in a company, buying shares or leaving it in the bank that pays us interest, among other options. In addition, even if we do not have a certain plan to invest the money we can simply spend it to satisfy our tastes and we do not have to wait to receive the money in the future.

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