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Money Over Time

Present Value Calculator

Discount a future amount back to what it's worth in today's dollars.

Calculator inputs
$
%
yrs

Present value

$13,960

Present Value Today

Discount amount

$11,040

Key insight

Present Value
$13,960
Discount Amount
$11,040
Value Reduction
44.16%
$13,960 0510 Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040Future Value $25,000, Present Value $13,960, Discount Rate 6.00%, Years Until Received 10 yrs, Discount Amount $11,040Future Value: $25,000Present Value: $13,960Discount Rate: 6.00%Years Until Received: 10 yrsDiscount Amount: $11,040

How it's calculated

Formula

Present Value = Future Value ÷ (1 + Discount Rate)^Years

How it works

Discounting is compounding in reverse. Dividing by (1 + r) once per year removes the growth the money could have earned, leaving what a future amount is worth in today's dollars. A higher rate or a longer wait shrinks the present value.

Variables

PV
Present Value — today's equivalent value.
FV
Future Value — amount received in the future.
r
Annual discount rate (decimal form). Example: 6% = 0.06
t
Years until the payment is received.

Worked example

Step 1 Future Value = $25,000 Step 2 Discount Factor = (1 + 0.06)^10 = 1.7908 Step 3 Present Value = $25,000 ÷ 1.7908 = $13,960 The promise of $25,000 in 10 years is worth about $13,960 today at a 6% discount rate.

Frequently asked questions

What discount rate should I use?

Use the return you could reasonably earn elsewhere on money of similar risk — often your expected investment return. A higher rate means future money is worth less today.

Why is a future dollar worth less than a dollar today?

Because a dollar today can be invested and grow. Discounting reverses that potential growth so amounts at different times can be compared fairly.

How is this different from Future Value?

They're mirror images. Future Value pushes money forward in time; Present Value pulls it back. Same rate, opposite direction.

When would I use present value?

To compare a lump sum now against payments later, judge whether a future payoff justifies today's cost, or value any cash flow that arrives in the future.

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