Reviewed November 2026 · Estimate only, not financial advice.
A dollar in ten years is worth less than a dollar today, because today’s dollar can earn returns in the meantime. Enter a future amount, a discount rate and the years, and see what it is worth now.
How This Present Value Calculator Works
Present value discounts a future amount back to today. The discount rate is the return you could earn in the meantime — the higher the rate or the longer the wait, the less the future amount is worth now. It is the mirror image of future value: same formula, solved the other way.
PV = FV ÷ (1 + r)n
FV = future value, r = annual discount rate (as a decimal), n = years. Discount = FV − PV.
Worked example: $20,000 to be received in 10 years, discounted at 5%. PV = $20,000 ÷ (1.05)10 = $12,278.27. The discount is $7,721.73 — the $20,000 is worth only 61.4% of its face value today.
Practical tips
Use it to judge a lump sum vs payments.Offered $50,000 now or $5,000 a year for 12 years? Discount each future payment and add them up — the bigger present value wins.
The rate you pick is the whole decision.At 5% the $20,000 is worth $12,278; at 8% only $9,264. Use the rate you could actually earn elsewhere — that is your opportunity cost.
Inflation is a discount rate too.To see purchasing power rather than investment value, discount at the expected inflation rate instead of a market return.
Long waits shrink fast.At 5%, money in 30 years is worth only 23% of its face value today. That is why distant promises are cheap.
Frequently Asked Questions
What is present value?
The value today of an amount to be received in the future, discounted at a rate that reflects what the money could earn in the meantime.
How is present value calculated?
PV = FV ÷ (1 + r)^n, where FV is the future value, r is the annual discount rate as a decimal, and n is the number of years.
What discount rate should I use?
The return you could earn on a comparable investment — for example 5% for a safe return, or 7–8% for a market investment. Higher rates give lower present values.
What is the difference between present value and future value?
They are the same idea in opposite directions. Future value grows a sum forward at a rate; present value discounts a sum back at a rate. The Future Value Calculator does the forward version.
Why does present value matter?
It is how you compare money at different times: lump sums vs installments, a settlement offer vs future payments, or whether a bond is fairly priced.
Is this financial advice?
No. This is a planning estimate only, not financial advice.
