The formula $$pv = pmt \times \left[\frac{1 - (1 + r)^{-n}}{r}\right]$$ calculates the present value of a series of equal cash flows received over time, known as an annuity. It connects the value of future cash flows to their current worth by considering the interest rate and the number of periods. This concept is crucial for understanding how money received in the future is worth less today, allowing for effective financial planning and investment analysis.
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