Present Value Calculator
Find the current worth of a future cash flow or annuity stream. Discount any amount back to today's dollars using the time value of money.
Results
Discount Schedule
| Period | Discount Factor | Present Value |
|---|---|---|
| 1 | 0.943396 | $94,339.62 |
| 2 | 0.889996 | $88,999.64 |
| 3 | 0.839619 | $83,961.93 |
| 4 | 0.792094 | $79,209.37 |
| 5 | 0.747258 | $74,725.82 |
| 6 | 0.704961 | $70,496.05 |
| 7 | 0.665057 | $66,505.71 |
| 8 | 0.627412 | $62,741.24 |
| 9 | 0.591898 | $59,189.85 |
| 10 | 0.558395 | $55,839.48 |
About This Tool
The Present Value Calculator determines what a future amount of money is worth in today's dollars. This concept, known as the time value of money, is one of the most fundamental principles in finance. Whether you're evaluating an investment, pricing a bond, or planning for retirement, understanding present value is essential.
The Present Value Formula
For a single lump sum:
PV = FV / (1 + r)n
Where FV is the future value, r is the discount rate per period, and n is the number of periods.
For an ordinary annuity (equal payments at end of each period):
PV = PMT × [(1 - (1 + r)-n) / r]
For an annuity due (payments at the beginning of each period), multiply the ordinary annuity PV by (1 + r).
Why Present Value Matters
Present value allows you to compare cash flows occurring at different times on an equal footing. A promise of $100,000 in 10 years is not the same as $100,000 today. At a 6% discount rate, that future $100,000 is only worth about $55,839 today. This means you should be willing to pay no more than $55,839 now for a guaranteed $100,000 in 10 years if you can earn 6% elsewhere.
Choosing the Right Discount Rate
The discount rate is perhaps the most critical input in any present value calculation. It represents your opportunity cost — the return you could earn on an alternative investment of similar risk. Higher discount rates produce lower present values, reflecting greater uncertainty or higher opportunity costs. Common choices include the risk-free rate for guaranteed payments, WACC for corporate projects, and personal required returns for individual investments.
Applications in Finance
Present value analysis is used in discounted cash flow (DCF) valuation to price stocks and businesses, in bond pricing to determine fair market value, in capital budgeting to evaluate projects (NPV), in insurance to calculate policy reserves, and in legal contexts to determine the present value of future lost earnings or structured settlements.
Present Value of Growing Cash Flows
In practice, cash flows often grow over time. The present value of a growing annuity accounts for a constant growth rate g: PV = PMT / (r - g) × [1 - ((1 + g) / (1 + r))^n]. This is especially useful when valuing businesses with expected revenue growth or estimating retirement needs with inflation-adjusted withdrawals.