Present Value Calculator

Present value (PV) is the current worth of money you'll receive in the future, discounted at a chosen rate. Because money can earn a return over time, a payment received later is worth less today than the same amount received now.

For a future lump sum, PV = FV / (1 + i)^n, where i is the periodic discount rate and n is the number of periods. For a stream of equal future payments (an annuity), PV = PMT × (1 − (1 + i)^−n) / i. This calculator handles both.

Use the rate of return you could otherwise earn on the money, or your required return for the risk involved. A common choice is your expected investment return or a relevant interest rate. A higher discount rate lowers the present value.

Because of the time value of money: a dollar today can be invested to grow, can lose value to inflation if delayed, and carries no waiting risk. Discounting captures all of that by shrinking future amounts back to today's terms.

Convert each option to its present value, then compare. For instance, to decide between a lump sum now and installments later, discount the installments to today's dollars and see which PV is higher.