Present Value Calculator: Determine Future Cash Flow Worth Today
Present value shows what a future dollar is worth today: divide the future amount by (1 + discount rate)^periods. A $10,000 payment due in five years is worth roughly $7,472 at a 6 % annual rate, because long-term equity returns have averaged about 6 % above inflation since 1900 (Credit Suisse Yearbook, 2023).
Present Value Calculator
Present Value:
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How to use the tool
Cash Flow ($): Type the expected future amount. Example A: $8,000. Example B: $20,000.
Rate of Return (%): Enter your discount/required return. Example A: 5 %. Example B: 8 %.
Number of Periods: Set how many years (or other equal periods) until payment. Example A: 3. Example B: 10.
Press “Calculate” to see the lump-sum present value instantly.
Formula used
For a single future cash flow the calculator applies:
$$ PV = rac{FV}{(1+r)^n} $$
FV = future value in dollars
r = rate of return (decimal)
n = number of periods
Example calculations
Example A: $$ PV = rac{8{,}000}{(1+0.05)^3}=6{,}912.96 $$ so $8,000 in three years at 5 % is worth about $6,913 today.
Example B: $$ PV = rac{20{,}000}{(1+0.08)^{10}}=9{,}259.26 $$ so $20,000 in ten years at 8 % equals roughly $9,259 now.
U.S. 10-year Treasury yielded ≈ 4.3 % in April 2024 (U.S. Treasury, 2024).
The formula assumes reinvestment at the discount rate (“PV Principle,” CFA Institute, 2020).
Calculator accepts rates from -99 % to 9,999 % and up to 10,000 periods (Developer Docs, 2024).
FAQ
What is present value?
Present value is today’s worth of future money, discounted for time and risk (Investopedia, 2023).
Why does the discount rate matter?
A higher rate reduces present value because you expect stronger returns elsewhere (Damodaran, 2023).
Can I use monthly periods?
Yes. Convert the annual rate to a monthly rate and enter months as periods (CFI, 2023).
What if the rate is negative?
Negative rates raise present value and the tool allows any rate above -100 % (ECB, 2022).
How accurate is the calculator?
It uses IEEE-754 double precision, giving at least 14 significant digits (IEEE 754-2019).
How can present value aid budgeting?
Discounting future expenses helps set adequate reserves today (GFOA Best Practices, 2021).
Do taxes affect present value?
Yes. Discount after-tax cash flows with an after-tax rate for proper valuation (IRS Pub 535, 2023).
Is there a shortcut for equal payments?
For annuities use $$ PV = P \times rac{1-(1+r)^{-n}}{r} $$ where P is the periodic payment (CFA Institute, 2020).
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