The formula for calculating the present value (PV) of a future amount (FV) is: PV = FV / (1 + r)^n Where:
FV = Future Value r = Discount rate (interest rate) n = Number of periods
For example, if an entrepreneur expects to receive $10,000 in three years and the discount rate is 5%, the present value would be calculated as: PV = $10,000 / (1 + 0.05)^3 ≈ $8,638.71