Present Value Calculator
Discount a future lump sum or a stream of repeating payments back to today's dollars.
A dollar tomorrow isn't worth a dollar today. Enter a future amount — or a repeating payment — plus a discount rate and time horizon, and see what it's worth right now. Useful for evaluating settlement offers, pension buyouts, lottery payout choices, and investment opportunities.
How to use this calculator
- Choose 'Single Future Sum' for one future payment, or 'Annuity' for repeating payments.
- Enter the future amount (or payment per period) and the number of years or periods.
- Enter the discount rate — your expected alternative return, as a yearly or per-period rate.
- Click Calculate to see the present value and how much value time takes away.
The formula
PV = FV / (1 + r)^n; PV of annuity = PMT × (1 − (1 + r)^−n) / r
Worked example
$10,000 received 10 years from now is worth $6,139.13 today at a 5% discount rate. An annuity paying $1,000 per year for 10 years at 5% is worth $7,721.73 today.
Frequently Asked Questions
What is present value?
Present value is what a future amount of money is worth today, given a discount rate. Because money can be invested and earn returns, $10,000 received 10 years from now is worth only about $6,139 today at a 5% discount rate. It's the foundation of the time value of money.
What discount rate should I use?
Use your opportunity cost — the return you could earn on the money elsewhere. A conservative choice is a high-quality bond yield; an aggressive one is your expected stock-market return. A higher discount rate produces a lower present value, reflecting that you're giving up more by waiting.
What's the difference between the lump-sum and annuity modes?
Lump-sum mode discounts a single future payment, like a settlement paid once in 10 years. Annuity mode values a stream of equal repeating payments, like $1,000 per year for 10 years. The annuity's present value is always less than the raw sum of its payments because each payment is discounted.
When would I actually use present value?
Common uses include deciding between a lump-sum pension and monthly payments, evaluating a structured-settlement buyout offer, choosing between lottery lump sum and annuity options, and pricing bonds. Any time money arrives in the future, present value tells you what it's really worth.
Why is the annuity's present value less than the total of all payments?
Because of discounting: each payment is worth less the further in the future it arrives. Ten payments of $1,000 total $10,000 on paper, but at a 5% discount rate they're worth only $7,721.73 today — the later payments are heavily discounted.