Present Value Calculator
Money in the future is worth less than money today, because today’s money can grow. Present value quantifies that: it tells you what a future sum is worth in today’s dollars at a given rate of return — the core calculation behind bonds, settlements and investment comparisons.
Results
Formula
How to use this calculator
- Enter the amount you will receive in the future.
- Enter the annual rate you could earn (the discount rate) and the wait in years.
- Choose the compounding frequency, then Calculate.
Worked example
$10,000 received in 10 years, discounted at 5% compounded annually.
- Growth factor: 1.05¹⁰ ≈ 1.6289.
- PV: 10,000 ÷ 1.6289 ≈ $6,139.13.
Result: $10,000 in ten years is worth about $6,139 today at 5%.
Frequently asked questions
What discount rate should I use?
The return you could realistically earn on money today with comparable risk — for example a Treasury yield for a guaranteed future payment, or your expected investment return for a riskier one.
How is this used with lump-sum settlements?
A settlement offer of future payments is compared against its present value. If the lump sum offered is below the present value at a fair rate, the payment stream is worth more on paper.
Does present value account for inflation?
Only if your discount rate does. Using a nominal investment return gives a nominal present value; using a real (inflation-adjusted) rate gives value in today’s purchasing power.
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