Barwerts

Barwerts is the plural form of the German term Barwert, which translates to present value. In finance, a Barwert (and by extension Barwerts when referring to multiple cash flows) is the current worth of a future sum of money or a stream of cash flows, discounted to today at a given rate. The present value represents the amount of money you would need today to achieve the future payments, assuming the opportunity cost of capital.

Calculation is typically done by discounting each future cash flow: PV = sum over t of CF_t / (1 + r)^t, where CF_t is the cash flow at time t and r is the per-period discount rate. For continuous compounding, PV = ∫_0^T CF(t) e^{-rt} dt. In practice, r may reflect risk, inflation, and the investor's required return. The concept is foundational to net present value (NPV) calculations and to the valuation of bonds, loans, annuities, and other financial instruments. A higher discount rate lowers present values, and earlier cash flows are more valuable than later ones.

Example: receiving $1,000 in three years with a 5% annual discount rate has a Barwert of about $860.66 today.

Notes: In English, the equivalent term is present value; Barwerts appear primarily in German-language finance literature. The term emphasizes the time value of money and the trade-off between timing and risk.