This present value calculator tells you what a sum of money you will receive in the future is worth today. Enter the future amount, a discount rate and the number of years.
Present value formula
PV = FV ÷ (1 + r ÷ n)n × t
FV is the future amount, r is the yearly discount rate, n is how many times per year it compounds and t is the number of years. The discount rate is the return you could earn elsewhere, or the rate that reflects risk and inflation.
Worked example
$10,000 received in 10 years, discounted at 5% per year, is worth about $6,139.13 today. In other words, $6,139.13 invested now at 5% would grow to $10,000 in 10 years.
Frequently asked questions
Why is money in the future worth less?
Money you have now can be invested to earn a return, and inflation reduces what future money can buy. Present value accounts for both.
What discount rate should I use?
Use the return you could reasonably earn on an investment with similar risk. A higher discount rate gives a lower present value.
What is the opposite calculation?
Future value works forward from today. Try the future value calculator.