Present Value Calculator
Find what money you will receive later is worth today: a future lump sum, a series of payments, or both, at your discount rate.
Present value is what a future amount is worth today once you discount it at a rate of return: PV = FV / (1 + i)^n, where i is the rate per period and n the number of periods. $10,000 received in 10 years, discounted at 5% a year, is worth $6,139.13 today, so waiting costs $3,860.87. Add regular payments and each one is discounted by how long you wait for it.
This calculator gives an educational estimate only. It is not financial advice, nor investment, tax or legal advice, and it does not value any specific bond, annuity, pension, settlement or lottery offer. It assumes a constant discount rate, level payments once per compounding period, and every payment made in full and on time; it leaves out taxes, fees, inflation beyond the rate you enter, and default risk. Results are only as good as the rate you choose. Talk to a qualified financial professional before you accept or sell a future payment stream.
Present value today
$6,139.13
- Total received over the term
- $10,000.00
- Cost of waiting (discount)
- $3,860.87
- Discount factor
- 0.613913
- Periods
- 10
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About the Present Value Calculator
A dollar you will receive later is worth less than a dollar in hand, because the one in hand could be invested now. Present value turns that idea into a number: it divides each future amount by (1 + i) raised to the number of periods you wait, where i is the discount rate per period. At 5% a year, the discount factor for 10 years is 0.613913, so $10,000 due in 10 years is worth $6,139.13 today. The same rate compounded monthly gives a smaller figure, $6,071.61, because the discounting is applied more often. For a stream of level payments the calculator discounts every payment and adds them up: $1,000 a year for 10 years at 5% is worth $7,721.73 if each payment arrives at the end of the year, and $8,107.82 if each arrives at the start, since every payment comes one period sooner. You can combine both, as with $10,000 at the end plus $100 a month for 5 years at 6%, which is worth $12,586.28 today. The answer depends heavily on the discount rate you choose, so try a few rates before you compare offers.
Frequently asked questions
What is the present value formula?+
For a single future amount, PV = FV / (1 + i)^n, where i is the annual rate divided by the compounding periods per year and n is the number of periods. For level payments it is PMT x (1 - (1 + i)^-n) / i, multiplied by (1 + i) when payments come at the start of each period. This calculator adds the two together.
What discount rate should I use?+
Use the return you could reasonably earn elsewhere on money of similar risk, often called your opportunity cost. A lower rate gives a higher present value and a higher rate a lower one. The calculator cannot tell you the right rate; try several to see how much the answer moves.
How is present value different from future value?+
They run the same math in opposite directions. Future value grows money you have today forward to a later date; present value discounts money you will get later back to today. The future value calculator on this site handles the forward direction.
Should payments be at the end or the start of each period?+
Most loans, bonds and annuity quotes pay at the end of each period, an ordinary annuity, which is the default. Rent and many lease or lottery payouts arrive at the start, an annuity due, which is worth more because each payment comes one period earlier.
Does present value account for inflation or taxes?+
Only through the rate you enter. To measure in today's buying power, use a rate that includes expected inflation. Taxes, fees and the risk that a payment is never made are not modeled, so adjust the rate or the amounts for them yourself.
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