Present Value Calculator
Calculate what a future sum of money is worth in today's dollars.
Present Value at Different Discount Rates
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Request a ToolHow to Use the Present Value Calculator
This calculator tells you what a future sum of money is worth in today's dollars, accounting for the time value of money. Here is how to use it:
- Enter the future value. This is the amount of money you expect to receive or need at a future date. For example, $100,000 from a pension payout, inheritance, or investment maturity.
- Set the annual discount rate. This represents your expected rate of return or the opportunity cost of money. A common baseline is 5-7% for general investing. Use a lower rate (2-3%) for conservative, low-risk comparisons.
- Enter the number of years. This is how far in the future the money will be received. The longer the time horizon, the lower the present value, since your money has more time to grow if invested today.
- Choose a compounding frequency. Annual compounding is standard for most present value calculations. More frequent compounding (quarterly, monthly) results in a slightly lower present value because the discount effect compounds more often.
Results update instantly as you type. The comparison table below the result shows present values at five different discount rates so you can see how sensitive the answer is to your rate assumption. Use the Share button to send a pre-filled link, or Copy to grab the result.
About Present Value
Present value is one of the most fundamental concepts in finance. It answers a simple question: what is a future amount of money worth right now? The core idea is that a dollar today is worth more than a dollar tomorrow, because today's dollar can be invested and earn a return. This principle is called the time value of money.
Businesses use present value to evaluate investments, compare projects, and price bonds. Individuals use it to assess the true value of future payouts like pensions, settlements, lottery winnings, or any promise of future cash. The discount rate you choose reflects your required rate of return or the rate you could earn on an alternative investment of similar risk.
All calculations run entirely in your browser. We never see or store your financial data.
Frequently Asked Questions
What is present value?
Present value is the current worth of a future sum of money, discounted at a specific rate of return. It reflects the principle that money available today is worth more than the same amount in the future, because today's money can be invested to earn a return. For example, $100,000 received 10 years from now at a 6% discount rate has a present value of about $55,839.
Why is money worth less in the future?
Money loses value over time for two reasons. First, inflation erodes purchasing power, so the same dollar buys less in the future. Second, there is an opportunity cost: money you have today can be invested to earn returns. A dollar today could become $1.06 next year at a 6% return. Therefore, receiving $1 next year is only worth about $0.94 today. The further into the future the payment, the less it is worth now.
What discount rate should I use?
The discount rate depends on your situation. For a rough inflation adjustment, use 2-3%. For comparing against stock market returns, use 7-10%. For corporate finance and project evaluation, companies often use their weighted average cost of capital (WACC), typically 8-12%. A higher discount rate means the future money is worth less today. When in doubt, try several rates using the comparison table to see how sensitive the result is.
How is present value used in investing?
Investors use present value to determine whether an investment is worth its price. If you can buy an asset for less than the present value of its expected future cash flows, it is a good deal. Bond pricing relies entirely on present value: a bond's price is the sum of the present values of all its future coupon payments and the face value at maturity. Stock valuation models like discounted cash flow (DCF) also depend on calculating the present value of projected future earnings.