Present Value Calculator
Work out what a payment you will receive in the future is worth in today's money.
How to use the Present Value Calculator
- Enter the future value.
- Enter the discount rate per year.
- Enter the years until received.
- Choose the compounding.
- Press Calculate. The result updates automatically as you type.
About the Present Value Calculator
A dollar today is worth more than a dollar later because today's dollar can be invested. Present value reverses compound interest: it asks how much you would need to invest now, at a given rate, to end up with the future amount.
Use it to compare a lump-sum settlement with a later payout, value a bond's face amount, or decide whether a future bonus is worth waiting for. The rate you choose should reflect what you could otherwise earn at similar risk; a higher rate means a lower present value.
Results are estimates, not financial advice. For a stream of equal payments, add the present value of each one or use an annuity formula.
Formula
PV = FV ÷ (1 + r/n)n·t
FV is the future amount, r the annual discount rate, n the compounding periods per year and t the years. The discount factor is 1 ÷ (1 + r/n)n·t. Example: $10,000 in 10 years at 5% compounded annually is worth 10,000 ÷ 1.6289 ≈ $6,139.13 today.
Example calculation
Using the default values:
- Future value = $10000
- Discount rate per year = 5%
- Years until received = 10 years
- Compounding = Annually
the calculator returns:
- Present value: $6,139.13
- Discount (time value): $3,860.87
- Discount factor: 0.613913
Frequently asked questions
What discount rate should I use?
Use the return you could reasonably earn elsewhere at similar risk, such as a Treasury yield for a guaranteed payment or a higher rate for riskier cash flows.
How is present value related to future value?
They are inverses. FV = PV × (1 + r)t, so PV = FV ÷ (1 + r)t.
What is net present value (NPV)?
NPV adds the present values of all future cash flows and subtracts the upfront cost. A positive NPV means the project beats the discount rate.
Last updated: · Category: Financial calculators