Present value is calculated by taking the future cashflows expected from an investment and discounting them back to the present day. To do so, the investor needs three key data points: the expected cashflows, the number of years in which the cashflows will be paid, and their discount rate. The discount rate is a very important factor in influencing the present value, with higher discount rates leading to a lower present value, and vice-versa. Using these variables, investors can calculate present value using the formula: Present Value=FV(1+r)nwhere:FV=Future Valuer=Rate of returnn=Number of periods\\begin{aligned} &\ ext{Present Value} = \\dfrac{\ ext{FV}}{(1+r)^n}\\\\ &\ extbf{where:}\\\\ &\ ext{FV} = \ ext{Future Value}\\\\ &r = \ ext{Rate of return}\\\\ &n = \ ext{Number of periods}\\\\ \\end{aligned}​Present Value=(1+r)nFV​where:FV=Future Valuer=Rate of returnn=Number of periods​