Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return (or discounted value).
The face value of a bond is usually $1000. You can price a bond a number of ways but I use the HP10bII calculator to do it. Lets say you get a coupon rate of 5% a year. You hold the bond for 5 years, the future value is 1000 and you require 5 % as well- all you do is enter into the calculator: pmt 50 (thats the coupon payment of $50) 5 I/YR (your req rate of return or ror), 5 N (number of periods), and fv -1000. This should leave you with a pv of 567.1
Try it and ask me me anything else if you need to.

How would you explain present value to you mom?

How would you price a bond?

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return (or discounted value).

The face value of a bond is usually $1000. You can price a bond a number of ways but I use the HP10bII calculator to do it. Lets say you get a coupon rate of 5% a year. You hold the bond for 5 years, the future value is 1000 and you require 5 % as well- all you do is enter into the calculator: pmt 50 (thats the coupon payment of $50) 5 I/YR (your req rate of return or ror), 5 N (number of periods), and fv -1000. This should leave you with a pv of 567.1

Try it and ask me me anything else if you need to.