Present value calculator

What future money is worth today.

Work out
Payments at the

Present value

6,139.13

At 5% a year over 10 years, compounded yearly

Of the future amount
6,139.13
Discount factor
0.613913
Effective yearly rate
5%
Periods
10 (one per year)

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How to work out a present value

  1. Enter the Amount in the future, the yearly Rate to discount at and the number of Years until it’s paid.
  2. Pick how often the rate compounds. For a series of equal payments (an annuity), enter the Regular payment and whether it arrives at the start or end of each period.
  3. Read the present value, split into the lump sum and the payments, with the discount factor used.

Why future money is worth less

Money you get later is worth less than money now, for three reasons: you could invest it in the meantime, prices tend to rise, and a future payment carries some risk of not arriving. Present value turns all of that into one rate and gives you a fair price today for a future amount.

Common uses:

  • Comparing offers. A lump sum now against payments over time, such as a lottery payout, a pension option or a legal settlement.
  • Valuing a bond or annuity: the present value of its future payments at the market rate.
  • Saving for a goal. How much to put away today to have a set amount later at a given return.

Payments at the start or end

For payments that arrive at the start of each period, such as rent paid in advance, choose Start of each period. Each payment is discounted one period less, so the present value is higher. Twenty yearly payments of 10,000 at 5% are worth 124,622.10 at the end of each year and 130,853.21 at the start. To go the other way, from today’s money to a future amount, choose Future value at the top or use the future value calculator.