Present Value Calculator
Discount future cash back to what it's worth today.
About Present Value Calculator
Present value answers the question: how much is a future amount worth right now? A dollar received in the future is worth less than one today because you could invest today's dollar and have more tomorrow. The discount rate represents the opportunity cost of not having the money now. When there are also periodic payments (an annuity), each payment is discounted separately and the results are summed.
Formulas
Present value of a lump sum
PV = FV ÷ (1 + r)^n
- FV
- Future value (lump sum)
- r
- Periodic discount rate
- n
- Number of periods
Present value of an annuity
PV_annuity = PMT × [1 − (1+r)^−n] / r
- PMT
- Periodic payment
- r
- Periodic discount rate
- n
- Number of periods
Worked example
With the default values below, Present Value Calculator returns Present Value of $25,417.46. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Future Value (lump sum)minimum 0 $
- 50,000 $
- Periodic Payment (annuity)minimum 0 $
- 0 $
- Annual Discount Rate (%)accepts 0–100
- 7
- Compounding Periods per Yearaccepts 1–365
- 1
- Number of Periodsminimum 1
- 10
- Payment Timingone of End of period (ordinary annuity), Start of period (annuity due)
- End of period (ordinary annuity)
Results
- Present Value
- $25,417.46
- PV of Lump SumContribution from the future value alone.
- $25,417.46
- Discount Factor
- 0.508349
- Total Discount Applied
- $24,582.54
- Periodic Discount Rate
- 7.000000%
Step by step
- 1Annual discount rate= 7.00%
- 2Periodic rate= 7.000000%
- 3Discount factor= 0.508349
- 4PV of lump sum= $25,417.46
- 5Total present value= $25,417.46
Assumptions and limits
- The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or fees or charges into account.
- Figures are rounded for display to 6 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
What discount rate should I use?
The discount rate should reflect your opportunity cost — what you could earn on a comparable investment with similar risk. For risk-free government bonds, use the prevailing yield. For business cash flows, use the company's weighted average cost of capital (WACC). For personal decisions, your expected investment return is a reasonable proxy.
What is the difference between PV and NPV?
PV discounts one or more future cash inflows. NPV (Net Present Value) subtracts the initial outlay from that PV, giving the net economic value added. If NPV > 0, the investment creates value. Use the IRR Calculator for a full NPV/IRR analysis of irregular cash flows.
Why does a higher discount rate reduce present value?
A higher discount rate implies you have more attractive alternative uses for your money. Future cash flows look less appealing in comparison, so their present value falls. This is why rising interest rates reduce bond prices: bonds' fixed future coupons become worth less in today's terms.
Can I use this for annuity valuation?
Yes. Enter the periodic payment, set Future Value to 0, and input the number of payments and discount rate. The result is the fair price (present value) of that income stream.