Present Value Calculator
Find what a future amount of money is worth today at a given discount rate.
Try an example
$35,034.38
About this calculator
What Is Present Value?
Present value (PV) is what a future sum of money is worth today, once you account for the interest it could earn in the meantime. A dollar received now can be invested and grow, so a dollar promised later is worth less than a dollar in hand. Present value discounts future money back to today's terms, and it is a foundation of finance: it lets you compare payments that arrive at different times on equal terms. This present value calculator handles both a single future amount and a series of periodic payments.
The Present Value Formulas
For one future amount: PV = FV ÷ (1 + i)ⁿ, where FV is the future value, i is the discount rate per period and n is the number of periods. For regular payments (an annuity): PV = PMT × [1 − (1 + i)⁻ⁿ] ÷ i. For example, $1,000 to be received in 10 years at a 6% annual discount rate has a present value of about $558 — the amount you would need to invest today at 6% to have $1,000 by then.
Worked Example
$100,000 received 18 years from now, discounted at 6% annually, is worth $35,034.38 today — meaning $64,965.62 of that future amount is effectively the "cost" of having to wait 18 years for it.
Net Present Value (NPV)
Present value is the building block of net present value, one of the most-used tools in business and investment analysis. NPV adds the present values of all expected future cash flows and subtracts the initial cost. A positive NPV means the project is expected to earn more than the required return; a negative NPV means it falls short. Companies use it to decide whether to build a plant, launch a product or buy equipment, and investors use the same idea to value stocks and bonds.
Choosing a Discount Rate
The result depends heavily on the rate you pick. Use the return you could realistically earn on an alternative investment with similar risk — or a higher rate for riskier cash flows. A higher discount rate lowers present value, and the effect grows with the length of time.
The Time Value of Money
Present value and future value are two sides of one idea. Moving money forward uses the Future Value Calculator; moving it backward uses present value. Together they explain loans, mortgages, annuities and savings plans. For the timing of an investment's recovery, see the Payback Period Calculator, and for how prices erode over time, the Inflation Calculator.
Worked example
$100,000 needed in 18 years, discounted at 6% a year, is worth about $35,034 today — that's how much you'd need to invest now, at that rate of return, to reach $100,000 by then.
Frequently asked questions
How is this different from the Future Value Calculator?
They're inverses of each other: Future Value grows a present amount forward in time, while Present Value discounts a future amount back to today's terms.
What discount rate should I use?
It depends on the context — a common choice is the return you could reasonably expect from investing the money elsewhere, since that's the opportunity cost of not having it today.
Does a higher discount rate increase or decrease present value?
Decrease — the higher the rate, the less a future dollar is considered worth today, since it implies faster alternative growth.
