Present Value Calculator Online Free
Present Value Calculator
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Present Value of Future Money
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The present value calculator tells you what a future sum of money is worth in today's dollars. It discounts the future amount at a given rate to account for the time value of money — the principle that money today is worth more than the same amount in the future.
Present Value Formula
PV = FV / (1 + r)^n
PV = present value. FV = future value. r = discount rate per period. n = number of periods. Example: $50,000 due in 10 years at 6% discount rate. PV = $50,000 / (1.06)^10 = $27,919.
Present Value of $100,000 at Different Discount Rates
| Discount Rate | 5 Years | 10 Years | 20 Years | 30 Years |
|---|---|---|---|---|
| 3% | $86,261 | $74,409 | $55,368 | $41,199 |
| 5% | $78,353 | $61,391 | $37,689 | $23,138 |
| 7% | $71,299 | $50,835 | $25,842 | $13,137 |
| 10% | $62,092 | $38,554 | $14,864 | $5,731 |
Present Value of an Annuity
PV = PMT x [1 - (1 + r)^-n] / r
PMT = payment per period. Used for valuing streams of payments. Example: $500/month for 10 years at 6% annual rate. PV = $500 x [1 - (1.005)^-120] / 0.005 = $45,000.
Where Present Value Is Used
Present value calculations appear in business valuation (what is this company worth today?), bond pricing (what should I pay for a bond paying $X per year?), pension lump sum calculations (is the buyout offer fair?), and lease vs. buy decisions. Whenever you compare money at different points in time, present value is the tool.
Frequently Asked Questions
What is present value?⌄
Present value is the current worth of a future sum of money, discounted at a given rate. It answers: "What is $50,000 five years from now worth in today's dollars?" Because you could invest money today and have more later, a future sum is worth less than the same amount right now.
What discount rate should I use for present value?⌄
Use a rate that reflects the opportunity cost of money — what you could earn elsewhere at similar risk. For safe investments, use 3-5%. For typical investment returns, 6-8%. For evaluating business projects, use the company's cost of capital or a hurdle rate of 10-15%. A higher discount rate makes future money worth less today.
What is the difference between NPV and PV?⌄
Present value (PV) is the current worth of a single future cash flow. Net present value (NPV) is the sum of all discounted future cash flows minus the initial investment. NPV is used to evaluate projects: positive NPV means the project creates value; negative NPV means it destroys value.
Is a higher or lower present value better?⌄
A higher present value is better when you are receiving money. If you are comparing two payment offers, the one with higher PV gives you more in today's dollars. When evaluating costs, lower PV is better — it means you are paying less in today's terms.