Discounting is the process of estimating the present value of an income stream by reducing expected cash flow to reflect the time value of money. It is the opposite of compounding, and mathematically, they are reciprocals.
The Present Value of One (PV1) calculates the current worth of a future amount, discounted at a specific interest rate. This concept is pivotal in finance and real estate for determining the value of future cash flows in today's terms.
