Present value is what money you will receive in the future is worth today. Because money can earn a return, a future dollar is worth less than one in hand — present value discounts it back at a rate you choose. This calculator finds the present value of a future lump sum, a stream of payments, or both, using PV = FV ÷ (1 + i)ⁿ, and shows the total discount between the raw future dollars and their worth now. It is the exact reverse of future value.
How to Calculate Present Value
A future amount, a discount rate, a horizon.
1
Enter the future amount
Type the sum you will receive later — the future value you want in today's terms.
2
Set the discount rate
Enter the annual discount rate, the number of years and the compounding frequency.
3
Read the present value
See what it is worth today, the nominal future total, and the discount between them.
Discounting the Future to Today
Comparing money across time on equal footing.
Present value is the backward half of the time value of money. A future amount is discounted by dividing by (1 + i)ⁿ — the same factor future value multiplies by — so the further away the money and the higher the rate, the less it is worth now. At a 6% discount rate, $10,000 arriving in ten years is worth only about $5,584 today, because that smaller sum invested now would grow to $10,000.
This is what makes present value indispensable for decisions that trade money now for money later: valuing a bond or pension, comparing a lump-sum payout against instalments, or judging whether a future return justifies an upfront cost. The discount rate is the key assumption — raise it and the present value falls sharply — so it is worth testing a few rates to see how much the answer depends on it.
Frequently Asked Questions
What is present value?
Present value is what a sum of money you will receive in the future is worth in today's money. Because money can earn a return, a dollar arriving years from now is worth less than a dollar in hand today — present value quantifies exactly how much less by discounting the future amount at a chosen rate. This calculator finds the present value of a future lump sum, of a stream of equal future payments, or of both together, at whatever discount rate and compounding frequency you set. The result also shows the total nominal amount and how much of it is discount — the gap between the raw future dollars and their worth today. Everything runs in your browser.
What is the present value formula?
For a single future amount, present value is PV = FV ÷ (1 + i)ⁿ, where FV is the future value, i is the discount rate per period and n is the number of periods. It is the exact inverse of the future value formula: where future value multiplies by (1 + i)ⁿ, present value divides by it. For a stream of equal payments, the present value of an annuity is PMT × (1 − (1 + i)⁻ⁿ) ÷ i, and the two are added when you have both a lump sum and payments. This calculator converts your annual discount rate and years into a per-period rate and period count from the compounding frequency, then discounts each component back to today.
What discount rate should I use?
The discount rate should reflect the return you could earn on the money if you had it today, plus the risk of the future amount not arriving. For a low-risk comparison, people often use the yield on safe investments; for a risky project or an uncertain payout, a higher rate is appropriate because the future dollars are less certain. There is no single correct number — the choice encodes your opportunity cost and risk tolerance, and it strongly affects the answer, since a higher discount rate shrinks the present value. Try a range of rates in the calculator to see how sensitive the present value is; that sensitivity is itself useful information when you are weighing a future payoff against money now.
Why is a future dollar worth less than a dollar today?
Because a dollar today can be put to work and grow, while a dollar promised for the future cannot start earning until it arrives — and it also carries the risk of never arriving. If you can earn 5% a year, then $1,000 today becomes $1,050 in a year, so a $1,000 payment due in a year is worth only about $952 to you now, since that is the amount which would grow to $1,000. Inflation reinforces the effect by eroding what future dollars can buy. Present value formalises this into a single discounted figure, letting you compare amounts arriving at different times on an equal footing — the foundation of loans, bonds, and any decision that trades money now for money later.
How is this different from the future value calculator?
The present value and future value calculators run the same time-value engine in opposite directions. The present value calculator starts from a known future amount and discounts it back to today, dividing by (1 + i)ⁿ to answer what it is worth now. The future value calculator starts from an amount today and grows it forward, multiplying by (1 + i)ⁿ to answer what it will become. Use present value to decide what a future sum, pension, settlement or bond payment is worth in today's terms, or to compare offers that pay out at different times; use future value to project what savings or an investment will grow into. Our Future Value Calculator handles the forward direction whenever that is the question.