present value / future value

Future cash flows are discounted at the

discount rate,

Determining the appropriate discount rate is the

key to properly valuing future cash flows

Present value (PV) is the current worth of a future sum of money or stream of cash flows given a specified...

rate of return.

higher the discount rate...

the lower the present value of the future cash flows

future value best illustrates

the principle of time value of money and the need for charging or paying additional risk-based interest rates.