Present Value("PV") is the opposite of Future Value. Take previous example, in order to have $216,623 at 10 years later and you willing to invest $11,000 yearly in an investment that give 6% return, how much capital you need? (Excel formula: PV(6%,10,11000,-216623,0)=$40,000)
You can also use Present Value to estimate inflation. In short, inflation means how fast you money shrinking. Example inflation of 3%: your $100 now will become $100 x (100%-3%) = $97 next year. $97 x (100%-3%) = $94. From the graph below: $100 will become $72, $64, $57 for 3%, 4% and 5% inflation respectively.
Test: If you think you can retire with S$1,000 (money now), how much money you need in 20 years later due to 3% inflation?
Answer: Use formula "FV": FV(3%,10,,-1000,0) = $1,344
For $2000(money now) and 3% inflation: FV(3%,10,,-2000,0) = $2,688
For $1000(money now) and 4% inflation: FV(4%,10,,-1000,0) = $1,480
You can download Present Value Excel from:
https://www.dropbox.com/s/dwst6cnyox75530/PresentValue.xlsx
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