Present Value Calculator

Q: What is present value?

What a future amount of money is worth today, after discounting at a rate of return. $20,000 arriving in 10 years, discounted at 6%, is worth about $11,168 today — because $11,168 invested now at 6% would grow into that $20,000.

Q: What is the present value formula?

PV = FV ÷ (1 + r)^n for a lump sum; for a payment stream, PV = PMT × (1 − (1+r)^−n) ÷ r. r is the discount rate per period, n the number of periods.

Q: What discount rate should I use?

The return you could realistically earn instead — your opportunity cost. Risk-free comparisons use Treasury yields; investment comparisons often use 6%-10%; the higher the rate or the longer the wait, the less future money is worth today.

Money later is worth less than money now. Find out exactly how much less — for a future lump sum or a stream of payments.

Present value

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Future total (nominal)

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Discount applied

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The present value formulas

Lump sum: PV = FV ÷ (1 + r)ⁿ
Payment stream: PV = PMT × [1 − (1 + r)⁻ⁿ] ÷ r

Worked example

$20,000 arriving in 10 years, discounted at 6%:

PV = 20,000 ÷ 1.06¹⁰ = 20,000 ÷ 1.7908 = $11,168

Meaning: $11,168 invested today at 6% becomes exactly $20,000 in 10 years — so the two are financially equivalent.

Where PV earns its keep

Present value is how you compare options that pay out at different times: a lottery's lump sum vs. annuity offer (discount the annuity payments and compare), a pension buyout, a legal settlement, "0% financing" vs. a cash rebate, or whether a business investment's future cash flows justify its price (that's NPV — net present value — which is just PV of inflows minus cost). The entire answer hinges on the discount rate: at 3%, distant money holds most of its value; at 10%, money 20 years out is worth less than 15 cents on the dollar. When someone offers you future money, the rate they assume is where the negotiation actually lives. See also the mirror-image future value calculator.

Frequently asked questions

What is present value?

Today's worth of future money. $20,000 in 10 years at a 6% discount rate ≈ $11,168 now.

What is the present value formula?

Lump sum: FV ÷ (1+r)ⁿ. Stream: PMT(1−(1+r)⁻ⁿ)/r.

What discount rate should I use?

Your opportunity cost — Treasury yields for risk-free comparisons, 6–10% for investment-grade alternatives.

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Note: Assumes a constant discount rate and end-of-period payments. Not financial advice. Last reviewed: July 2026.