The present value of K due in 4 years is 678.80. If the force of discount (same as force of interest 8) is cut by a factor of , that present value would be 766.30. What would the present value be if the rate of discount d is cut by a factor of ?

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.