Present Value Calculator
This present value calculator shows how much a future sum of money is worth today, given a discount rate — the reverse of compound growth. Enter the future amount, rate and time period to see its value in today's terms.
The amount you'll receive (or need) at a future date.
The annual rate used to discount future money back to today's value — often your expected investment return or cost of capital.
How many years until the future value is received.
Present value
$11,168
What that future amount is worth today, at your discount rate.
How to use this present value calculator
- 1Future value: the amount you'll receive or need at a future date.
- 2Discount rate: the annual rate used to translate future money into today's value — often your expected investment return, or a lender's required rate of return.
- 3Time period: how many years until that future amount arrives.
Understanding your results
Present value is what that future sum is genuinely worth today — a core concept behind 'a dollar today is worth more than a dollar tomorrow,' since today's dollar can be invested and grow. Discount applied shows how much value is lost simply by having to wait, at your chosen rate.
The formula
Present value = Future value ÷ (1 + Rate)^YearsThis is the future value compound interest formula solved backward — instead of growing a present amount forward, it shrinks a future amount back to today by dividing by the same compounding factor. A higher discount rate or a longer time period both reduce the present value, since either makes the future money 'less valuable' relative to having cash in hand today.
A worked example
$20,000 to be received in 10 years, discounted at 6%, is worth about $11,168 today — meaning if you could invest $11,168 today at 6% for 10 years, it would grow into the same $20,000, so anything less than $11,168 offered today in exchange for that future $20,000 would be a worse deal.
Notes for the UK, US and India
Present value is the foundation of how bonds, pensions, structured settlements and lottery lump-sum offers are all priced — anyone offering you 'a smaller amount now instead of a larger amount later' is implicitly applying a discount rate, and this calculator lets you check whether their offered rate seems fair relative to your own alternatives.
Frequently asked questions
What discount rate should I use?+
A common approach is your realistic alternative investment return — if you could otherwise earn 6% investing elsewhere, use 6% as your discount rate when evaluating whether a future payment is a good deal.
Why is present value always less than future value?+
Because money available today can be invested and grow — receiving the same amount later means missing out on that growth, so the future amount must be 'discounted' down to reflect what it's genuinely worth in today's terms.
Can I use this to evaluate a lottery lump-sum offer?+
Yes — compare the lump-sum offer to the present value of the full annuity payout at a realistic discount rate; if the lump sum is smaller than this calculator's present value, the annuity option is arguably the better deal (before taxes and personal circumstances).
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