Present value Future dollars into the present In previous equation, r is often referred to as the discount rate, and(1+r)- is the discount factor Finally consider a promise to pay a stream of money, SRo today, SR, one year from now, and so on for T years? R1 R P=R0+ T (1+n)(+)2(1+ 99 Present Value: Future Dollars into the Present • In previous equation, r is often referred to as the discount rate, and (1+r)-T is the discount factor. • Finally consider a promise to pay a stream of money, $R0 today, $R1 one year from now, and so on, for T years? ( ) ( ) ( ) PV R R r R r R r T T = + + + + + + + 0 1 2 2 1 1 1