Present Value Calculator
$
5.00%
10 yrs
Present Value$30,695.66
Total Discount$19,304.34
This present value calculator discounts a single future sum back to what it is worth today, answering the core time-value-of-money question: how much should you set aside now to have a target amount later? You provide the future value, an annual discount rate, the number of years, and how often interest compounds, and it returns the present value plus the total discount stripped out by the wait. It is the mirror image of a future-value projection and underpins bond pricing, lump-sum offers, and savings goals.
Formula
PV = FV ÷ (1 + r ÷ n)^(n · t)
- PV
- Present value — worth today of the future sum
- FV
- Future value you expect to receive
- r
- Annual discount rate as a decimal (rate% ÷ 100)
- n
- Compounding periods per year (1, 2, 4, 12, or 365)
- t
- Number of years
How it works
- Enter the Future Value (the dollar amount you expect later) and set the Annual Rate slider (0%-20% in 0.1% steps) to your discount or expected return rate.
- Set the Years slider (1-50) and choose a Compounding frequency: Annual, Semi-Annual, Quarterly, Monthly, or Daily, which maps to 1, 2, 4, 12, or 365 periods per year.
- The Present Value hero card shows today's equivalent amount, and the Total Discount card shows the future value minus that present value.
Worked example
Finding the present value of $50,000 due in 10 years at a 5% annual rate compounded annually.
- With annual compounding, n = 1, so the divisor is (1 + 0.05 ÷ 1)^(1 × 10) = 1.05^10 ≈ 1.62889.
- PV = 50,000 ÷ 1.62889 = $30,695.66.
- Total discount = 50,000 − 30,695.66 = $19,304.34.
$50,000 in 10 years is worth about $30,695.66 today, a discount of $19,304.34.
Frequently asked questions
- What discount rate should I use?
- Use the rate of return you could realistically earn elsewhere, or your cost of capital. A higher rate shrinks the present value because money you forgo could have grown faster, so the choice of rate drives the result more than any other input.
- How does compounding frequency change the present value?
- More frequent compounding means a larger effective annual rate, which discounts the future sum slightly harder and produces a marginally lower present value. Daily compounding gives the lowest PV and annual the highest for the same stated rate.
- How is present value different from future value?
- Future value grows a known amount today forward in time, while present value shrinks a known future amount back to today. They use the same compounding factor: present value divides by it where future value multiplies by it.
- Does this calculator handle a stream of payments?
- No. It discounts one lump future sum. To value a series of recurring cash flows, such as an annuity, total each discounted payment separately or use an annuity-specific tool.