Present Value Calculator
Find what a future sum is worth today.
Results update as you type.
How it works
Present value is what a sum of money you expect to receive in the future is worth in today's dollars, once you account for the return that money could otherwise earn. It matters because it is the mirror image of future value and a cornerstone of financial decision-making: to compare a payment due later against cash in hand now, you have to discount the future amount back to the present. This present value calculator takes the future sum, the rate you could earn (the discount rate), the number of years and the compounding frequency, and divides out the growth that would have occurred, leaving the equivalent value today. Discounting is used because a dollar promised in ten years is worth less than a dollar now — you lose the chance to invest it in the meantime — and the discount rate captures that opportunity cost. People use present value to decide whether a future payout, a lump-sum versus installment choice, or an investment's promised return is worth it today, and businesses use it to value cash flows, bonds and projects. A higher discount rate or a longer wait shrinks the present value, because more potential growth is being stripped away. The result assumes a single future amount and a constant rate, so it is cleanest for one payment; a stream of future cash flows would be discounted period by period. Treat the figure as the fair value today of that future money under your assumed rate.
PV = FV ÷ (1 + r ÷ n)^(n × t), r = discount rate, n = compounds per year, t = years
FV is the future amount and r is the discount rate as a decimal. Dividing r by n gives the rate per compounding period, and n × t is the number of periods over t years. Raising (1 + r ÷ n) to that power is the same growth factor used for future value; here you divide the future sum by it rather than multiply, reversing the compounding to strip out the return the money would have earned. What remains is the amount that, invested today at that rate, would grow into the future value entered.
Source:Present value (discounting)
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter future value, discount rate and number of years.
- 2
Adjust the options
Adjust compounds per year if they apply — sensible defaults are already set.
- 3
Read your result
Present value updates instantly as you type — no button to press.
Frequently asked questions
What is a discount rate?
The discount rate is the annual return you assume you could earn on money if you had it today, used to translate a future amount into present terms. It represents the opportunity cost of waiting. Choosing it is a judgment call: some use the rate on a safe investment, others use their expected investment return or a business's cost of capital. A higher discount rate reflects better alternative uses for the money and produces a lower present value, since more potential growth is being given up.
Why is future money worth less today?
Because money in hand can be put to work immediately. If you could invest a dollar today and earn a return, then a dollar promised in the future is worth less than that dollar now — you are missing out on the growth in between. There is also uncertainty and inflation to consider, both of which make a future promise less valuable than present cash. Present value quantifies exactly how much less, given the return you could otherwise earn.
When would I use present value?
It is useful whenever you must compare money available at different times. Common cases include deciding between a lump-sum payout and a series of future payments (as with a lottery or pension), judging whether an investment's future return justifies its price today, or valuing a bond. Businesses use it to evaluate projects by discounting expected future cash flows. Any time you need to know what a future dollar is really worth right now, present value is the tool.
How does the time period affect present value?
The longer you have to wait for the money, the lower its present value, because the discounting compounds over more periods. A sum due in twenty years is worth far less today than the same sum due in two, at the same rate. This is why long-dated future payments can look surprisingly small in present terms. Lengthening the term in this tool, or raising the discount rate, both push the present value down, sometimes sharply.
Is present value the same as net present value?
No, though they are related. Present value discounts a single future amount back to today. Net present value, or NPV, applies the same discounting to a whole series of future cash flows — often an investment's costs and returns over several years — and sums them, usually subtracting the initial outlay. NPV is the standard tool for evaluating projects and investments. This calculator handles the single-amount case that underlies the more complex NPV computation.