CalcArcade.

Present Value Calculator

Enter an amount you expect to receive in the future, the discount rate and how many years away it is. You get its value in today’s money and how much the waiting costs.

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Result

Estimate for information only, not professional advice. Last reviewed .

How we calculate it

Present value is the reverse of growth: PV = FV ÷ (1 + r ÷ n)^(n × t), where r is the yearly discount rate, n the compounding periods per year and t the years. The discount factor is 1 ÷ (1 + r ÷ n)^(n × t).

For example, 10,000 received in 5 years, discounted at 8% a year, is worth 10,000 ÷ 1.08^5 = 6,805.83 today.

Assumptions and limits

  • The discount rate is your choice. It reflects the return you could earn elsewhere or the risk of waiting, and a higher rate gives a lower present value.
  • Taxes and inflation are not included unless you build them into the rate.
  • Use the NPV calculator when there are several payments over time.

Frequently asked questions

What does present value mean?

It is the amount you would need today to end up with a given amount later, if it earned the discount rate. It answers the question of what a future payment is worth now.

How do I choose a discount rate?

Common choices are the return on a safe alternative, such as a savings account, or a higher rate if the future payment is uncertain. There is no single correct rate, so try a few.

Why is a bigger discount rate worth less?

A higher rate means your money could grow faster elsewhere, so a payment far in the future is worth less today.

Related calculators

Worked example (a fixed example using the starting numbers, it does not change as you type)

Inputs: Future amount ($) = 10000; Discount rate (% per year) = 8; Years until you receive it = 5; Compounding = Yearly.

  • Present value $6,805.83
  • Discount amount $3,194.17
  • Discount factor 0.6806

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Last reviewed: . Formulas and assumptions are described on our methodology page. For information only; not professional advice.