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Present Value Calculator
Money promised later is worth less than money in hand — the question is how much less. This present value calculator discounts a lump sum or a whole annuity stream to today's value, updating live as you drag the discount-rate slider.
See how this works on $10,000 of future money — 3 real examples
Present value today
$0
Future value
$0
Discount applied
$0
Discounted by
0%
Present value vs discount rate
How today’s value falls as the discount rate rises — the dashed line marks your current 6.0% rate.
Year-by-year discountingHow the present value is built up
How we discount future money to today’s value
A single future amount is discounted with the standard present value formula:
PV = FV / (1 + r/m)m·n
where FV is the future value, r the annual discount rate, m the compounding periods per year and n the number of years. Choosing continuous compounding replaces the factor with er·n. The discount applied is simply FV − PV — the time value the future dollars give up.
A level payment stream uses the present value of an annuity formula, which discounts every payment back to today and sums them:
PV = PMT · (1 − (1 + i)−N) / i
i = r / payments-per-year N = years × payments-per-year
where PMT is each payment and i the per-period rate. For an annuity due (beginning-of-period timing) the whole result is multiplied by(1 + i), because each payment is discounted one period less. This is the core of discounted cash flow analysis: value each future flow on its own, then add. Present value is always reported as a positive amount, and every figure recalculates the moment you move a slider — nothing here is rounded before the final display.
Ten thousand future dollars, valued today
The same $10,000 of future money, three ways: promised in 10 years, promised at a harsher rate, and arriving as ten yearly checks.
The single payout, discounted at 6%
value today$5,584
- Ten years of waiting costs $4,416 — the promise arrives at 56 cents on the dollar.
- The 6% rate is what the money could earn elsewhere; that alternative is the whole discount.
- Nothing is lost or taxed here — this is only what waiting does to a dollar's worth.
A dollar in ten years is a little more than half a dollar now, at an ordinary 6%.
Load this example (opens in a new tab)The same payout at a 10% discount rate
value today$3,855
- Four points more rate strip another $1,729 from today's value.
- The discount now claims 61.4% of the promise — the bar tips past three-fifths.
- Between 5% and 10%, today's value slides from $6,139 to $3,855 — the rate is the whole game.
Whoever sets the discount rate decides what the future is worth — argue over that number first.
Load this example (opens in a new tab)The same $10,000, spread into checks
value today$7,360
- Ten $1,000 payments carry the same face value, yet they are worth $1,776 more than the lump.
- Early checks barely feel the discount — the first one gives up less than 6% of itself.
- Only $2,640 of discount applies in total, against $4,416 for the single distant payout.
When money arrives matters as much as how much arrives — sooner dollars are bigger dollars.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Present value, in plain English
- Future money is worth less today. Cash you could invest now would grow, so a promised future amount is discounted back at the rate you could otherwise earn.
- The discount rate does the heavy lifting. Raising it from 5% to 10% can cut a 10-year present value nearly in half — the sensitivity chart above shows the curve for your inputs.
- Lump sum vs annuity are different questions. Use lump-sum mode for one future payout; use annuity mode for a pension, lease, or coupon stream of equal payments.
- Timing matters for annuities. Beginning-of-period payments (rent, leases) are worth more than end-of-period ones, because each is discounted one fewer period.
- PV is the building block of NPV. Net present value just subtracts what you invest upfront from the present value of the cash flows it returns.
Related calculators
Frequently asked questions
What is present value?
Present value is the current worth of money you will receive in the future, discounted at a chosen interest rate. Because a dollar today can be invested and grow, a dollar promised years from now is worth less than a dollar in hand. $10,000 due in 10 years is worth about $5,584 today at a 6% discount rate — that gap is the whole idea behind this pv calculator.
What is the present value formula?
For a single future sum it is PV = FV / (1 + r)ⁿ, where r is the periodic discount rate and n the number of periods. For a stream of equal payments — the present value of an annuity — it is PV = PMT × (1 − (1 + r)⁻ⁿ) / r, which simply discounts each payment back to today and adds them up. Both formulas are shown in full in the section below the results.
What discount rate should I use?
Use your required rate of return or opportunity cost of capital — the return you could earn on money elsewhere at similar risk. A higher discount rate lowers the present value because your alternatives are more attractive. Many people model 5–8% for long-run planning; drag the discount-rate slider above to see exactly how sensitive the answer is.
What is the difference between present value and net present value?
Present value discounts one future amount or a stream of inflows back to today. Net present value (NPV) goes one step further and subtracts the upfront investment from the present value of all future cash flows, so NPV can be negative. In discounted cash flow analysis you calculate the present value of each flow first, then net out what you paid to get NPV.
How does the present value of an annuity differ from a lump sum?
A lump sum discounts a single future amount, while the present value of an annuity discounts a series of equal payments — a pension, a lease, or a bond coupon stream. Switch modes above to compare. Ten yearly payments of $1,000 discounted at 6% are worth about $7,360 today, whereas a single $10,000 payment in year 10 is worth about $5,584.
Does payment timing affect present value?
Yes. Beginning-of-period payments — an annuity due, common for rent and leases — are each discounted one period less, so they are worth slightly more than end-of-period (ordinary annuity) payments. On a 10-year, $1,000 annual annuity at 6%, switching to beginning-of-period timing raises the present value by about 6%, the size of one period of discounting.
Why does a higher discount rate lower the present value?
A higher rate means your money could grow faster elsewhere, so a fixed future amount is worth proportionally less today. Present value falls steeply as the rate rises: $10,000 in 10 years is worth about $6,139 at 5%, $5,584 at 6%, and only $3,855 at 10%. The sensitivity chart above plots this curve for your exact inputs.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .