Present Value Calculator
Money later is worth less than money now. Enter a future amount, a discount rate, and the years — see its value today, with the formula shown.
| Discount applied | — |
| Each $1,000 of future money is worth | — |
The present value formula
PV = FV ÷ (1 + r)n
$100,000 arriving in 10 years, discounted at 6%, is worth about $55,839 today — because $55,839 invested at 6% grows to exactly $100,000 in 10 years. Present value is compound interest run backward.
Where you actually use this
- Lump sum vs payments: a $100,000 payout in 10 years vs $60,000 now? At 6%, take the $60,000 — its PV is higher.
- Lottery/settlement choices: "annuity vs lump sum" offers are exactly PV problems with the insurer's discount rate hidden inside.
- Pension buyouts: compare the buyout offer to the PV of the promised payments.
- Sanity-checking future promises: "$1 million at retirement" in 30 years at 3% inflation has a PV near $412,000 of today's buying power.
Choosing the discount rate
The rate encodes your alternative: use a safe rate (4–5%) when the future money is guaranteed, a market rate (7–10%) when comparing against investing, or the inflation rate when you only care about buying power. Higher rate → future money worth less today.
Frequently asked questions
What is present value?
What a future sum is worth today, given that money can earn a return in the meantime. $100,000 in 10 years at a 6% discount rate has a present value of about $55,839.
What discount rate should I use?
Match it to the alternative: ~4–5% (safe rates) for guaranteed comparisons, ~7% for stock-market opportunity cost, or the inflation rate for pure buying-power questions.
Why is money later worth less?
Three stacked reasons: money now can be invested to grow; inflation erodes future dollars; and future payments carry risk of not arriving. The discount rate prices all three.
What is the difference between PV and NPV?
PV discounts one future amount. NPV (net present value) sums the PVs of a whole series of cash flows minus the upfront cost — use the NPV/IRR calculator for multi-year projects.
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Last updated: 2026-07-08