Future Value Calculator
Calculate the future value of a lump sum or recurring payments with compound interest. Supports ordinary annuity and annuity due modes.
Present Value Calculator
Calculate the present value of a future sum or annuity stream. Discount future cash flows to today using any rate and time period.
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$
%
years
Present Value Today
$41,726.51
Discount of $58,273.49 (58.3%)
PV of Lump Sum⧉
$41,726.51
Total Future Amount⧉
$100,000.00
Sum of all values
Time Value Discount⧉
$58,273.49
Total number of items
Discount Rate Sensitivity
| Discount Rate | Present Value | Discount |
|---|---|---|
| 2% | $74,301.47 | $25,698.53 |
| 3% | $64,186.19 | $35,813.81 |
| 4% | $55,526.45 | $44,473.55 |
| 5% | $48,101.71 | $51,898.29 |
| 6% | $41,726.51 | $58,273.49 |
| 7% | $36,244.60 | $63,755.40 |
| 8% | $31,524.17 | $68,475.83 |
| 10% | $23,939.20 | $76,060.80 |
| 12% | $18,269.63 | $81,730.37 |
Planning notes, formulas, and examples
About the Present Value Calculator
Present value (PV) answers the question: what is a future amount of money worth in today's dollars? By discounting future cash flows at an appropriate rate, you can determine their current equivalent. This is the cornerstone of all financial valuation — from pricing bonds and stocks to evaluating business investments.
This calculator computes the present value of a single future lump sum, a series of equal payments (annuity), or both combined. It supports multiple compounding frequencies and ordinary annuity vs annuity due modes.
Whether you are evaluating a lottery payout, comparing settlement offers, or analyzing an investment that promises future returns, present value tells you what those future dollars are actually worth today. Present value calculations underpin virtually every area of finance, from bond pricing and mortgage valuations to retirement planning and lawsuit settlements. Understanding how discounting works allows you to make fair comparisons between cash flows that arrive at different times.
When This Page Helps
A dollar today is worth more than a dollar tomorrow because of the opportunity to invest it. Present value quantifies exactly how much more. Without this calculation, you cannot make rational comparisons between cash flows occurring at different times. This capability is especially critical when evaluating structured settlements, annuity buyouts, or any scenario where you must choose between money now and money later.
How to Use the Inputs
- Enter the future value (the amount you expect to receive in the future).
- Enter the periodic payment if applicable (for annuity streams).
- Enter the annual discount rate.
- Enter the time period in years.
- Select the compounding frequency.
- View the present value and the total discount applied.
Formula used
PV of lump sum: PV = FV / (1 + r/n)^(n*t). PV of ordinary annuity: PVA = PMT x [1 - (1+r/n)^(-n*t)] / (r/n). PV of annuity due: PVA_due = PVA x (1+r/n). Total PV = PV_lump + PVA.Example Calculation
Result: Present Value: $41,727
A payment of $100,000 in 15 years at a 6% annual discount rate has a present value of $41,727. That means if you invested $41,727 today at 6%, you would have exactly $100,000 in 15 years. The $58,273 difference is the time value of money — the cost of waiting.
Tips & Best Practices
- Use a discount rate that matches the risk of the cash flow — higher risk demands a higher discount rate.
- For risk-free cash flows (government bonds), use the Treasury yield as the discount rate.
- Present value decreases as the discount rate or time period increases.
- When comparing two payment options (lump sum vs annuity), convert both to present value for a fair comparison.
- Inflation-adjusted present value uses the real rate (nominal rate minus inflation).
- Corporate finance typically uses the weighted average cost of capital (WACC) as the discount rate.
Present Value in Everyday Decisions
Present value is not just for finance professionals. Every time you choose between paying cash today or financing over time, you are implicitly making a present value decision. A car dealer offering 0% financing for 60 months is giving you a gift — the present value of those payments is less than the cash price.
Discounting and Investment Analysis
Every investment decision comes down to comparing the present value of expected future cash flows against the cost of the investment. If PV of cash flows exceeds the cost, the investment creates value. If not, you are better off with alternatives. This principle underlies discounted cash flow (DCF) valuation, NPV analysis, and bond pricing.
Sensitivity to the Discount Rate
Small changes in the discount rate have large effects on present value, especially over long periods. A $1 million payment in 30 years is worth $231,000 at 5%, $174,000 at 6%, and $131,000 at 7%. This sensitivity is why choosing the right discount rate is one of the most important decisions in financial analysis.
Sources & Methodology
Last updated:
Methodology
This page discounts a future lump sum, a level annuity stream, or both back to today's dollars using the discount rate, horizon, compounding frequency, and annuity-timing mode selected by the user. It shows the time-value discount explicitly so the user can compare a future payment stream with a cash value today on the same basis.
The worksheet assumes a constant discount rate and evenly spaced payments. It does not decide what the right discount rate should be; that still depends on the risk, timing, and opportunity-cost context of the cash flows being evaluated.
Sources
- Present Value (Investor.gov / U.S. Securities and Exchange Commission)
- Future Value (Investor.gov / U.S. Securities and Exchange Commission)
Frequently Asked Questions
It depends on the context. For personal finance, use your expected investment return (7-10% for stocks). For corporate projects, use the company WACC. For comparing to safe alternatives, use the risk-free rate (Treasury yield). Higher-risk cash flows require higher discount rates.
They are inverses. Future value compounds a present amount forward in time; present value discounts a future amount backward. PV = FV / (1+r)^n and FV = PV x (1+r)^n are mirror formulas.
A higher discount rate means you require a greater return for waiting. The more you demand for the time value of money, the less a future payment is worth today. At an infinite rate, any future payment has zero present value.
Absolutely. If you win $1 million paid over 20 annual installments of $50,000, the present value at a 5% discount rate is roughly $623,000. This explains why lottery lump-sum options are always less than the advertised jackpot.
Nominal present value uses the stated discount rate. Real present value adjusts for inflation by using the real rate (approximately nominal rate minus inflation). Real PV tells you the purchasing power equivalent in today's dollars.
A bond price is the present value of all its future cash flows — coupon payments and face value at maturity — discounted at the market interest rate. When market rates rise, present values fall, and so do bond prices.
More in this topic
Net Present Value (NPV) Calculator
Calculate net present value of future cash flows. Enter up to 20 periods with a discount rate to evaluate any investment or project decision.
IRR Calculator
Calculate the Internal Rate of Return (IRR) for a series of cash flows. Supports up to 20 periods with NPV analysis, payback period, and profitability index.