• Entry
  • Reader's guide
  • Entries A-Z
  • Subject index

Present Value of Earnings

Present value of earnings (PVE) is defined as the present discounted value of expected future earnings. Income is most commonly measured in annual terms; just about everyone knows their approximate yearly earnings from work. Moreover, just about everyone has at least a vague idea of the average yearly earnings of an occupation besides their own. Thus, the commonly used yardstick for measuring income is in terms of dollars earned annually; however, for some purposes, this annual yardstick is not sufficient. Some examples are weighing the net financial effect of going to college, estimating the economic damages in a wrongful-death lawsuit, and quantifying the value of human capital. The appropriate yardstick for purposes such as these is the present discounted value of expected future earnings over ...

    • Loading...
    locked icon

    Sign in to access this content

    Get a 30 day FREE TRIAL

    • Watch videos from a variety of sources bringing classroom topics to life
    • Read modern, diverse business cases
    • Explore hundreds of books and reference titles