Present Value Calculator

Present value calculator for discounting future money into today’s value

Present value answers a simple question: if you will receive money in the future, what is that future amount worth in today’s money? This matters because money now can be invested, used to pay down debt, or kept as a buffer. A future amount is usually worth less than the same number today, unless the discount rate is zero. This calculator helps you turn a future value into a comparable “today” value so you can make cleaner decisions.

Use this calculator when you are comparing offers with different timing. Examples include choosing between a lump sum today versus a larger payout later, evaluating a fixed deposit or investment promise, or estimating what you should pay today for a future cash amount. You enter the future value (the amount you expect to have or receive), an annual discount rate (the return you require, or an opportunity cost), and the number of years until the amount happens. Optionally, you can change the compounding frequency if your rate is quoted with more frequent compounding.

The output is the present value (PV), which is the amount that would grow into your future value if it earned the discount rate over the time period. The calculator also shows the “discount” (future value minus present value), which is the price you are paying for waiting. A small extra insight is a simple sensitivity view: the calculator shows what PV looks like if the discount rate is 1 percentage point lower and 1 point higher. That gives you a quick feel for how rate assumptions change the answer, without forcing you to run multiple separate calculations.

Assumptions and how to use this calculator

• The future value happens once at the end of the time period (a single lump sum, not multiple payments).
• The discount rate is an annual percentage rate and stays constant over the full period.
• Compounding frequency affects how the annual rate is applied; if unsure, leave it on Annual.
• Taxes, fees, and inflation are not automatically included. Treat the discount rate as “net of” anything you want to account for.
• Results are estimates for decision support, not a guarantee of investment outcomes.

Common questions

What discount rate should I use?

Use the return you require for the risk you are taking, or the return you could reasonably earn elsewhere with a similar risk. If you are comparing against debt, a practical choice is your after-tax borrowing rate. If you are discounting a relatively safe future amount, a lower rate may be reasonable. If the future amount is uncertain, a higher rate often makes sense.

What is the difference between present value and discount?

Present value is the “today” value of the future amount at your chosen rate and time. The discount is the gap between the future value and the present value. A larger discount means the time delay and rate assumption are reducing today’s value more aggressively.

Does compounding frequency matter?

Sometimes. If the same annual rate is applied more frequently, the present value can change slightly depending on how the rate is defined. If your rate is a simple annual rate and you are not sure about compounding, keep Annual. If your rate is explicitly compounded monthly or daily, selecting that option can better match how the number is quoted.

What if the rate is 0%?

If the discount rate is 0%, the present value equals the future value because there is no time value of money in the calculation. In real life, 0% is unusual unless you are deliberately ignoring opportunity cost. If you want an inflation-adjusted view, use a “real” discount rate that subtracts expected inflation from your required return.

What if the time period is not a whole number of years?

You can enter decimals. For example, 6 months can be entered as 0.5 years. The calculator will apply the formula using that fractional period. If your timing is better represented in months and your rate is monthly, you can convert years to months and use a monthly compounding frequency, but a fractional year is usually enough for practical estimates.