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The major differences between present value and future value are as follows −

Current value of cash flow in future.

Current value of an asset or an investment at starting of a particular time period.

Inflation is considered.

Discount rate and interest rate are considered.

Helps investors in decision making.

Discounted process/method is followed.

Present value = (cash flow)/ (1 + r)^n.

Value of future flow after certain future period.

Value of an asset or an investment at the end of a particular time period.

Inflation is not considered.

Only interest rates are considered.

Least considered by investors in making investment decisions.

Capitalization process/method is followed.

Future value = (present value) or (cash flow) (1 + r)^n.

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