Present Value Calculator

Calculate the present value of a future sum and periodic payments. Determine how much a future cash flow is worth in today's dollars using the discount rate.

Present Value Inputs

$

Amount to receive in the future

$

Regular payment per period

%

Enter your values and click "Calculate" to determine the present value.

Related Calculators

Pro Tip

Use present value to compare offers that pay at different times. A lower amount today may be worth more than a higher amount years from now, depending on your discount rate.

Try the Future Value Calculator →

Popular Tools

Understanding Present Value

Present value (PV) is the current worth of a future sum of money or stream of cash flows given a specified rate of return. It answers the question: "How much is a future payment worth today?"

The concept is based on the time value of money -- a dollar today is worth more than a dollar tomorrow because today's dollar can be invested and earn interest. The discount rate represents the opportunity cost of capital or the required rate of return.

Present value is widely used in finance to evaluate investments, price bonds, value businesses, and compare payment options. For example, if someone offers you $50,000 in 10 years, the present value tells you what that promise is worth today.

A higher discount rate means a lower present value, reflecting greater uncertainty or higher opportunity cost. Present value calculations help make apples-to-apples comparisons between cash flows occurring at different times.

Present Value Formulas

PV = FV / (1+r)n + PMT × [(1 − (1+r)−n) / r]

Where:

PV = Present value

FV = Future value (lump sum)

r = Discount rate per period

n = Number of periods

PMT = Payment per period

Example

$50,000 future lump sum + $500/period at 5% discount for 10 periods:

  • • PV of lump sum: $50,000 / (1.05)^10 = $30,696
  • • PV of annuity: $500 x [(1 - 1.05^-10) / 0.05] = $3,861
  • • Combined present value: $34,557
  • • Total future cash flows: $55,000
  • • Total discount: $20,443

Frequently Asked Questions

What discount rate should I use?
The discount rate should reflect the opportunity cost of your capital. Common choices include the risk-free rate (Treasury yields) for safe comparisons, your expected investment return, or the weighted average cost of capital (WACC) for business decisions.
Why is a dollar today worth more than a dollar tomorrow?
Because a dollar today can be invested to earn interest or returns, making it worth more than the same dollar received in the future. This is the foundational principle of the time value of money.
How is present value used in real life?
Present value is used to price bonds, evaluate investment opportunities, compare lump-sum vs annuity options (like lottery winnings), value businesses through discounted cash flow analysis, and make lease-vs-buy decisions.
What happens when the discount rate increases?
A higher discount rate reduces the present value. This makes intuitive sense: when you can earn higher returns elsewhere, future cash flows are worth less to you today.