Present Value Calculator
Calculate the present value of a future sum of money using the time value of money. See year-by-year discounting with any discount rate.
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%
Years
Results
Present Value
$61,391.33
Total Discount
$38,608.67
Effective Total Rate
62.89%
Year-by-Year Discounting
| Year | Present Value | Discounted |
|---|---|---|
| 1 | $95,238.10 | $4,761.90 |
| 2 | $90,702.95 | $9,297.05 |
| 3 | $86,383.76 | $13,616.24 |
| 4 | $82,270.25 | $17,729.75 |
| 5 | $78,352.62 | $21,647.38 |
| 6 | $74,621.54 | $25,378.46 |
| 7 | $71,068.13 | $28,931.87 |
| 8 | $67,683.94 | $32,316.06 |
| 9 | $64,460.89 | $35,539.11 |
| 10 | $61,391.33 | $38,608.67 |
How is Present Value Calculated?
Present value (PV) tells you what a future sum of money is worth today, given a specified discount rate. It discounts future cash flows back to the present using the time value of money.
Where FV = future value, r = discount rate, n = number of years
Example
$100,000 received 10 years from now is worth about $61,391 today at a 5% discount rate. The total discount is $38,609, reflecting the time value of money.
Common Use Cases
- Evaluating investment opportunities and business projects.
- Comparing lottery payout options (lump sum vs. annuity).
- Valuing bonds and fixed-income securities.
FAQs
What discount rate should I use?
Use your required rate of return or the opportunity cost of capital. A higher discount rate results in a lower present value.
What is the relationship between PV and interest rates?
Present value is inversely related to the discount rate. As rates rise, the present value of future money falls, and vice versa.