Summing up the present values of all 30 years gives us the total present value of their future earnings, which is $2,281,988. The salary-to-PV ratio is then $120,000 divided by $2,281,988, which ...

Present value = $45.45 In completing the steps, you learn that the present value of $50 is $45.45 at a 10% discount rate. Hence, the year one cash flow of $50 has a present value of $45.45.

The present value interest factor of an annuity is calculated to compare the real value of a lump sum payment today and the same amount of money paid over time.

How an Annuity Table Works An annuity table provides a factor, based on time, and a discount rate (interest rate) by which an annuity payment can be multiplied to determine its present value. For ...

After three years at 3% interest, the value of $1 shrinks to $0.915142, or—expressed as a formula—1 / (1 + 0.03)3. So present value is 6,000 × 0.915142 = $5,490.85. What You Need to Know ...