What circumstance would cause present value (PV) to be greater than future value (FV)?

Present value (PV) being greater than future value (FV) is a situation that arises when the future cash flows, when discounted at a certain rate for a certain period, yield a present value that exceeds the future expectation of that cash flow due to various factors. In this context, negotiating interest rates can be significant.

When interest rates are negotiated to be lower, the discount rate applied to future cash flows decreases. A lower discount rate means that the future cash flows are not being reduced as much when brought back to present value. Consequently, if the negotiated interest rate is significantly lower, it can result in a scenario where PV is perceived as greater than what the FV would imply, particularly if there are favorable conditions such as immediate return on investment or cash flow influx.

Although high discount rates generally lead to a lower present value in comparison to a future value, and longer time periods can often diminish present value relative to future value, the emphasis here is on situations where negotiating interest rates can lead to better present value assessments. In practical terms, lower negotiated interest rates enhance the attractiveness of present cash flows relative to future payments, emphasizing their value today over future expectations.