Present Value Calculator
What a future sum is worth in today’s money, discounted at a rate you choose.
Last updated
Your details
Result
- Present value
- $46,319.35
- Future amount
- $100,000.00
- Value lost to discounting
- $53,680.65
- Discount factor
- 0.463193
What $100,000.00 in 10 years is worth today
53.68% of the future sum
$100,000.00 in 10 years, discounted at 8.00%…
PV = FV ÷ (1 + r)ⁿ
r = 8.00% = 0.0800, n = 10
(1 + 0.0800)^10 = 2.158925
$100,000.00 ÷ 2.158925
PV = $46,319.35
Formula — written step by step
100,000 in 10 years, discounted at 8%…
PV = FV ÷ (1 + r)ⁿ
r = 8% = 0.08, n = 10
(1.08)¹⁰ = 2.158925
100,000 ÷ 2.158925
PV = 46,319.35
FV is the amount you will receive, r the discount rate per period, and n the number of periods. Money arriving in ten years is worth less than half its face value today, because the same sum invested now would have grown to meet it.
A worked example
A lump sum or instalments?
- Offer A
- 50,000 today
- Offer B
- 75,000 in 6 years
- Your discount rate
- 7%
- Discount B back to today
- (1.07)⁶ = 1.500730
- PV = 75,000 ÷ 1.500730
- PV = 49,975.66
Take the 50,000 today — but only just
The two offers are within 25 of each other, so the decision turns entirely on the discount rate. At 6% the future sum wins; at 8% the immediate one wins comfortably. When a result is this close, the rate you chose is doing all the work, and it is worth testing a range.
How to use this calculator
- Enter the amount you expect to receive in the future, in the money of that future date.
- Enter a discount rate. Use what the money could realistically earn elsewhere at similar risk — a deposit rate for a safe sum, a higher figure for an uncertain one.
- Enter how many years until you receive it.
- Compare the present value against any amount available today. The larger figure is the better offer, on these assumptions.
Why future money is worth less
A sum you will receive in ten years is worth less than the same sum today, and not only because of inflation. Money in hand can be invested, so having it now means having it plus everything it earns in the meantime. Present value reverses that growth: it asks what amount, invested today at your chosen rate, would grow into the future sum.
That makes it the tool for comparing offers that arrive at different times. A payout today and a larger payout in six years cannot be compared as written; discount the later one back to today and they become two numbers on the same scale.
Choosing the discount rate
The discount rate is the single most consequential input, and it is a judgement rather than a fact. The standard way to think about it is opportunity cost: what could this money earn if you had it now and invested it at comparable risk?
A very safe future payment — a government bond, a guaranteed settlement — deserves a low rate close to deposit or treasury yields. A payment that depends on a business still trading in six years deserves a considerably higher one, because there is a real chance it never arrives. Using a low rate for a risky payment is the most common way present-value analysis flatters a bad deal.
Present value and inflation
Inflation and discounting are related but distinct. If your future amount is expressed in future money, discount it at a nominal rate that already contains an inflation expectation. If it is expressed in today’s purchasing power, discount at a real rate instead.
Mixing the two is a frequent error and always in the same direction: discounting a nominal future amount at a real rate makes the future sum look far more valuable than it is. Keep both sides of the comparison in the same kind of money.
Formula & methodology
What this calculator assumes
- Assumes a single sum received at the end of period n, discounted at a constant rate throughout.
- The discount rate is a judgement, not a fact. It should reflect what the money could earn elsewhere at comparable risk — change it and the answer changes substantially.
- Makes no allowance for inflation unless your discount rate already includes it. Discounting a nominal amount at a real rate overstates the present value.
Sources
- Brealey, Myers & Allen, Principles of Corporate Finance, 13th edition, McGraw-Hill, 2019 — the time value of money.
What 100,000 in the future is worth today
| Years away | At 4% | At 8% | At 12% |
|---|---|---|---|
| 1 | 96,154 | 92,593 | 89,286 |
| 5 | 82,193 | 68,058 | 56,743 |
| 10 | 67,556 | 46,319 | 32,197 |
| 20 | 45,639 | 21,455 | 10,367 |
| 30 | 30,832 | 9,938 | 3,338 |
Read down a column to see how quickly distance erodes value, and across a row to see how much the discount rate matters. At 12%, a sum thirty years out is worth barely three cents on the dollar.
Frequently asked questions
What discount rate should I use?
Use the return you could realistically get elsewhere on money of similar risk. For a safe, certain future payment that might be a government bond yield; for an uncertain business payment, considerably more. There is no single correct answer, so it is worth testing two or three rates.
What is the difference between present value and NPV?
Present value discounts one future amount. Net present value discounts a whole series of cash flows, including the initial outlay, and nets them off. Use NPV when there is more than one payment.
Why is my present value higher than the future amount?
That happens only with a negative discount rate, which implies money loses value by being invested. It is unusual but not impossible — deeply negative real interest rates have occurred.
Does the discount rate have to be annual?
No. The rate and the number of periods simply have to match. For monthly discounting, use a monthly rate and count months.