Present Value Calculator
Present value tells you what a future amount of money is worth today, given a discount rate. Enter the future value, annual rate, and number of years to see today's equivalent worth.
How it works
Present value (PV) discounts a future sum back to today using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the periodic discount rate, and n is the total number of periods.
If interest compounds more than once per year, divide the annual rate by the number of compounding periods and multiply the years by that same number. For example, monthly compounding uses r = annual_rate/12 and n = years×12.
The result shows how much a future payment is worth in today's dollars — the higher the rate or the longer the wait, the smaller the present value.
Tips
Use a discount rate that reflects your opportunity cost — what you could otherwise earn on similar-risk investments.
Comparing two future payments? Convert both to present value first so you're comparing apples to apples in today's dollars.
FAQ
What is present value?
Present value is the current worth of a future sum of money, discounted at a given rate. It reflects the idea that a dollar today is worth more than a dollar tomorrow because money can earn returns.
What discount rate should I use?
Use a rate that matches your expected return or cost of capital. Common choices include a savings or investment return rate, an inflation-adjusted rate, or your required rate of return for the risk involved.
How does compounding frequency affect present value?
More frequent compounding slightly lowers present value for the same annual rate, because interest accrues more often. Monthly compounding produces a marginally smaller PV than annual compounding.