Value today by wait
Present value by year
The formula
How it works
Present value tells you what a future sum of money is worth today, once you account for the interest it could have earned in the meantime. Money later is worth less than money now — this calculator puts a number on exactly how much less.
FAQ
Because money you have now can be invested and grow. To end up with a set amount later, you only need to set aside a smaller amount today — that smaller amount is the present value.
Use the return you could realistically earn elsewhere, or the interest rate on a comparable investment. A higher rate discounts the future more heavily, giving a smaller present value.
About the present value calculator
This calculator finds what a sum of money you will receive in the future is worth in today’s money. The idea, called the time value of money, is that a dollar today is worth more than a dollar next year because today’s dollar can earn interest. Present value reverses that growth: it discounts a future amount back to the present, so you can compare payments that arrive at different times on a fair, like-for-like basis.
How to use it
Enter the future value — the amount you expect to receive later — then the annual discount rate and the number of years until it arrives. The calculator returns the present value and how much has been discounted away. For example, $1,000 arriving in 10 years, discounted at 6%, is worth about $558 today. The chart and table below show how the value shrinks the longer you have to wait for the money.
The formula
Present value uses , where is the future amount, is the yearly discount rate as a decimal (6% becomes 0.06) and is the number of years. The term is the same growth factor used for future value — here it sits in the denominator, so instead of growing the amount it shrinks it. The gap between and is the interest that money could have earned over those years.
Where it is used
Present value is the backbone of finance. Investors use it to decide what a bond or a future payout is worth paying for now, and companies use it to judge whether a project’s future cash flows justify its upfront cost. It sits behind loan pricing, pension valuations, lottery lump-sum-versus-annuity choices and insurance settlements. Any time money changes hands at different points in time, present value is how those amounts are compared on equal footing.