Present Value Calculator

Discount a future amount to its equivalent value in today's money.

Future Value (FV)

Discount Rate (% per period) Enter as 5 for 5% or 0.05 for 5%.

Number of Periods (n)

Present value reverses future-value math: instead of growing a present sum forward, it discounts a future amount back to today's money. For a future value FV, a periodic discount rate r, and n periods: PV = FV / (1 + r)ⁿ. The discount rate is the opportunity cost of capital — the return available on a comparable alternative investment — not the inflation rate. Example: 1,000 received 10 years from now, discounted at 5% per year, is worth 613.91 today, because 613.91 invested at 5% for 10 years grows back to 1,000. The same formula applies to zero-coupon bond pricing: the price equals the discounted face value. For multiple future cash flows of mixed signs (an investment with both costs and returns), the NPV / IRR calculator generalizes this to NPV = Σ CF_t / (1 + r)^t. This page handles a single lump-sum future value.

Formula:

PV = FV / (1 + r)ⁿ
This is the time-value-of-money discount: a dollar in the future is worth less today.

How present value works

The intuition

A dollar in the future is worth less than a dollar today, because today's dollar can be invested and earn interest. Present Value reverses that: given a future amount, what is the equivalent amount in today's money at a given discount rate?

For example, $1,000 received 10 years from now is worth about $613.91 today at a 5% discount rate — because $613.91 invested at 5% for 10 years grows to $1,000.

Discount rate vs. interest rate

They use the same arithmetic. The "discount rate" is the opportunity cost of capital: the return you could earn elsewhere on a comparable investment. Picking the right rate is the hard part — common choices are the risk-free rate (e.g. 10-year Treasury yield) for certain cash flows, or a higher hurdle rate for riskier ones.

Use cases

Present value is the building block of DCF valuation (discounted cash flow). It is also the answer to questions like: "Is it better to take $900 now or $1,000 in a year?" — at a 5% discount rate, $1,000 in a year is worth $952.38 today, so $900 now is the worse deal.

Worked examples

Example 1: $1,000 in 10 years at 5%

Enter futureValue = 1000, discountRate = 5, periods = 10. Result: $613.91.

Example 2: Lump sum or annuity?

This calculator handles a single lump sum. For a series of future cash flows (an annuity), use the NPV / IRR Calculator.

Related tools

Present Value is the mirror image of Compound Interest — one grows money forward in time, the other discounts it back. Three situations where this is the right tool:

Lump-sum decisions. "Take $800 now or $1,000 in a year?" Discount the $1,000 at your opportunity-cost rate and compare.
Settlement valuation. A legal or insurance payout arriving years from now is worth less than the same amount today — discount it to find the equivalent present-day value.
Bond pricing (intro). A zero-coupon bond's price is the present value of its single future face value. Coupon bonds are a series of present values summed together — see the Bond Present Value Calculator.

For a series of future cash flows — a project with both upfront cost and ongoing returns — use the NPV / IRR Calculator instead. For monthly loan payments, use the Loan Calculator. To determine what an amount or savings stream will grow to in the future, use the future value calculator.

Frequently asked questions

What is the formula?

PV = FV / (1 + r)ⁿ, where r is the discount rate per period and n is the number of periods. Dividing by (1 + r)ⁿ discounts the future amount back to today's dollars.

What's the difference between present value and net present value?

Present value discounts a single future amount. Net Present Value (NPV) discounts a series of cash flows — usually a mix of inflows and outflows — and sums the present values. NPV is the right tool for evaluating an investment or project; this calculator is for a single lump sum.

How do I pick a discount rate?

For a risk-free cash flow (e.g. a Treasury bond), use the yield on a comparable-maturity Treasury. For a risky investment, add a risk premium on top. The discount rate should reflect what you could earn elsewhere with similar risk, not the rate of inflation.

Does the result account for taxes or inflation?

No. The result is pre-tax and nominal. For a real (inflation-adjusted) result, use a discount rate that has been reduced by the expected inflation rate.