The present value of future cash flows tells you how much money you’ll receive in the future is worth today. Since money loses value over time due to factors like inflation or investment opportunities, future cash flows need to be discounted. This calculation helps you determine the current worth of those future payments or income. For example, receiving ₹1,000 five years from now is worth less than ₹1,000 today because you could invest the money now and earn interest. Present value helps you compare the value of future cash with what it’s worth in today’s dollars.