Present value

What a future dollar is worth today — discount it back.

A dollar today is worth more than a dollar tomorrow — present value discounts future cash to today's terms.

Present value

PV = FV / (1 + r)ⁿ

Try it

$100 in 5 years at 8%

PV = 100 / 1.08⁵ ≈ $68.06.