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6 May, 2015 - 17:10

Present value is used for both financial analysis and to make business decisions. The concept of present value indicates that the value of a dollar today is not the same as the value of a dollar in the future. When a bond is issued two obligations arise: 1) periodic interest payments and 2) paying the the face amount of the bond at maturity. The selling price of a bond is determined by the present value of the combination of these two obligations.