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Present Value Calculator

Discount a future amount or a stream of payments back to its value in today's money.

About the Present Value Calculator

Enter an amount you'll receive in the future, any yearly payments, the discount rate and the number of years. The calculator shows what that money is worth today, so you can compare a later payment with cash now.

Money received later is worth less than money today because today's money can be invested. Present value reverses compound growth using a discount rate, usually your expected return or borrowing cost.

The formula

PV=FV(1+r)n+PMT⋅1−(1+r)−nrPV = \frac{FV}{(1+r)^n} + PMT \cdot \frac{1-(1+r)^{-n}}{r}

FV
the future lump sum
PMT
a payment received at the end of each year
r
discount rate per year as a decimal
n
number of years

Worked example

50,000 received in 10 years, discounted at 6%

  1. Discount factor: 1 ÷ 1.06¹⁰ = 0.558395
  2. PV = 50,000 × 0.558395 = 27,919.74
  3. So 27,919.74 invested today at 6% would grow to 50,000 in 10 years

Things to keep in mind

  • Assumes a constant discount rate and payments at the end of each year.
  • Inflation is only included if your discount rate includes it.

Questions people ask

Which discount rate should I use?

What you could reliably earn elsewhere, or your cost of borrowing.

How is this used?

Comparing lottery lump sums with annuities, valuing pensions and business projects.

Present value or future value?

They're the same relationship in reverse: future value grows money forward, present value brings it back to today.

Sources