price of a bond is always the present value of a stream of future expected payments.

Access for free at openstax.org
C • Present Discounted Value 535

Other Applications

Present discounted value is a widely used analytical tool outside the world of finance. Every time a business

thinks about making a physical capital investment, it must compare a set of present costs of making that

investment to the present discounted value of future benefits. When government thinks about a proposal to,

for example, add safety features to a highway, it must compare costs incurred in the present to benefits

received in the future. Some academic disputes over environmental policies, like how much to reduce carbon

dioxide emissions because of the risk that they will lead to a warming of global temperatures several decades

in the future, turn on how one compares present costs of pollution control with long-run future benefits.
{"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "upload_timestamp": "2026-02-07T15:24:38.309401", "title": "Principles of Microeconomics 3e", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_size_mb": 26.99, "file_type": ".pdf", "total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "batch_upload": true}