Present Value Calculator
What future money is worth today.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Present value
- $27,919.74
- PV of lump sum
- $27,919.74
- PV of payment stream
- $0.00
- Discount applied
- $22,080.26
- Discount factor
- 0.5584
Quick answer
Present value (PV) is what a future amount is worth today, given the return you could earn in the meantime. Divide the future amount by (1 + rate) raised to the number of years: PV = FV ÷ (1 + r)ⁿ. At a 6% discount rate, $50,000 received in 10 years has a present value of $27,919.74.
What the Present Value calculator does
This calculator discounts money you expect to receive later back to today's dollars. Enter a single future amount, a fixed annual payment, or both — the result adds the two together, which is how a bond is priced (yearly coupons plus the face value at maturity).
Use it to compare a lump-sum offer with an installment plan, decide what a future inheritance or settlement is worth now, or set the most you should pay for an investment that pays out later. It is the reverse of a future value calculation: future value grows money forward, present value shrinks it back.
The tool assumes a constant annual rate, annual compounding and payments at the end of each year. If cash flows change from year to year or you need to subtract an upfront cost, use the net present value calculator instead.
The formula
PV = FV ÷ (1 + r)ⁿ + PMT × [1 − (1 + r)⁻ⁿ] ÷ r
| Symbol | Meaning | Unit |
|---|---|---|
| PV | Present value — what the future cash is worth today | $ |
| FV | Single amount received at the end of year n | $ |
| PMT | Equal payment received at the end of every year | $ per year |
| r | Discount rate per year, as a decimal (6% = 0.06) | — |
| n | Number of years until the lump sum / number of yearly payments | years |
These are the standard time-value-of-money formulas taught in every corporate finance textbook and used in the CFA curriculum. The first term is the lump-sum discount; the second is the present value of an ordinary annuity. 1 ÷ (1 + r)ⁿ is the discount factor: multiply any amount by it to get its value today.
The result is not exact for monthly or semiannual payments (most US bonds pay coupons twice a year) or for payments at the start of each period (an annuity due, worth (1 + r) times more). With a 0% rate the calculator simply adds the payments.
Worked examples
A lump sum in 10 years
You are promised $50,000 in 10 years and could otherwise earn 6% a year.
Inputs
- Future amount50000 $
- Discount rate6 %
- Years away10
- Annual payment instead0 $
Result
- Present value$27,919.74
- PV of lump sum$27,919.74
- PV of payment stream$0.00
- Discount applied$22,080.26
- Discount factor0.5584
The promise is worth about $27,920 today — the discount factor is 0.5584. If someone offered you more than that in cash now, taking the cash and investing it at 6% would leave you ahead.
Annual payments versus a buyout
A structured settlement pays $25,000 a year for 20 years. You want to know what a fair lump-sum buyout would be at a 5% rate.
Inputs
- Future amount0 $
- Discount rate5 %
- Years away20
- Annual payment instead25000 $
Result
- Present value$311,555.26
- PV of lump sum$0.00
- PV of payment stream$311,555.26
- Discount applied$0.00
- Discount factor0.3769
The 20 payments total $500,000 but are worth about $311,555 today at 5%. A buyout offer well below that figure is charging you a discount rate higher than 5%.
Pricing a bond
A $1,000 bond with 10 years left pays a $40 coupon once a year. Similar bonds now yield 5%.
Inputs
- Future amount1000 $
- Discount rate5 %
- Years away10
- Annual payment instead40 $
Result
- Present value$922.78
- PV of lump sum$613.91
- PV of payment stream$308.87
- Discount applied$386.09
- Discount factor0.6139
The bond is worth about $922.78: $613.91 for the face value and $308.87 for the coupons. It trades below face value because its 4% coupon is lower than the 5% market yield.
Discount factors at common rates
Multiply a future amount by the factor to get its present value. The higher the rate and the longer the wait, the less future money is worth today.
| Rate | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| 3% | 0.8626 | 0.7441 | 0.5537 | 0.4120 |
| 5% | 0.7835 | 0.6139 | 0.3769 | 0.2314 |
| 7% | 0.7130 | 0.5083 | 0.2584 | 0.1314 |
| 10% | 0.6209 | 0.3855 | 0.1486 | 0.0573 |
Choosing a discount rate
The rate is the most important input and the one people get wrong most often. It should be the return you would realistically earn on money of similar risk over the same period.
- Guaranteed payments (a pension, a Treasury bond): use a current Treasury or high-grade bond yield for that term.
- Personal decisions (lump sum vs installments): use what you would actually do with the cash — pay down a 7% loan, or earn a CD or savings rate.
- Business projects: use the company's cost of capital, often with a premium for riskier projects.
- Inflation only: to see what future dollars buy in today's money, discount at the expected inflation rate. The inflation calculator shows the same effect looking backwards.
A 2-point change in the rate moves the answer a lot over long periods: $50,000 in 30 years is worth about $20,600 today at 3% but $11,570 at 5%.
Lump sum, annuity or both
The two money inputs cover three situations:
- Only a future amount: leave the annual payment at 0. Typical for savings bonds, inheritances or a sale price due later.
- Only payments: set the future amount to 0. Typical for annuities, structured settlements, rent you will receive, or a pension stream. The annuity calculator covers payouts in more detail.
- Both: coupon bonds, or a lease with a residual value at the end.
How to use the Present Value Calculator
- 1Enter the future amount you expect to receive, or 0 if you only have regular payments.
- 2Enter the discount rate as an annual percentage — the return you could earn elsewhere at similar risk.
- 3Enter how many years away the lump sum is (this is also the number of annual payments).
- 4Add the fixed yearly payment if there is one, then read the combined present value and the discount factor.
Frequently asked questions
What is the difference between present value and net present value?
Present value is what future cash is worth today. Net present value subtracts the upfront cost of getting that cash, so a positive NPV means an investment beats your discount rate.
Why is present value lower than the future amount?
Because money you have now can be invested. At 5%, $6,139 invested today grows to $10,000 in 10 years, so $10,000 in 10 years is worth $6,139 now.
Does a higher discount rate increase or decrease present value?
A higher rate decreases it. Future money is worth less when the alternative return is higher, which is also why bond prices fall when interest rates rise.
How do I calculate present value with monthly payments?
Use the monthly rate (annual rate ÷ 12) and the number of months in the same formulas. This calculator works in whole years, so it slightly understates the value of monthly payment streams.
Should I take a lump sum or annual payments?
Compare the lump sum with the present value of the payments at a rate you could realistically earn. If the lump sum is higher, it is worth more in today's money, though taxes, longevity and spending discipline also matter.
References
- Principles of Corporate Finance (Brealey, Myers & Allen), chapter on present value — McGraw Hill
- CFA Program Curriculum – Quantitative Methods: The Time Value of Money — CFA Institute
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
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