Present Value Calculator

PV = FV ÷ (1 + i)^n

What present value means

Present value is the mirror image of future value. Money you will receive later is worth less than the same amount today, because today’s money could be invested and grow in the meantime. Present value tells you exactly how much less — it discounts a future amount back to what it is worth right now.

The further away the money, or the higher the rate you could otherwise earn, the smaller the present value. In the formula above, FV is the future amount, i is the rate per period and n is the number of periods between now and then.

Worked example — $100,000 to be received in 10 years, discounted at 7% a year: PV = 100,000 ÷ 1.07^10 = 100,000 ÷ 1.9672 ≈ $50,835. So a promise of $100,000 in a decade is worth only about $50,800 today — roughly half.

Reading the discount curve

The chart shows the same future amount valued at different waits: receive it today and it is worth its full face value; wait longer and its value today falls away along the curve. The point at your chosen horizon is the present value shown above.

The curve is steepest at first and flattens later, but it keeps dropping — which is why long-dated promises, and high discount rates, shrink a future sum so sharply.

Choosing a discount rate

The discount rate is the return you could realistically earn on the money instead — sometimes called the opportunity cost. A safe saver might use a low rate; valuing a risky business cash flow calls for a higher one to reflect the risk.

It is the single most influential input: small changes in the rate move the present value a lot over long horizons. When a present value matters, it is worth testing a range of rates rather than trusting one.