Present Value Calculator

Present value is what a future sum of money is worth today, given a rate of return you could otherwise earn. Because money can grow if invested, a payment you'll receive later is worth less than the same amount now. $10,000 in ten years at a 5% discount rate is worth about $6,139 today.

Divide the future amount by (1 + rate) raised to the number of years: PV = future ÷ (1 + r)^n. It's the reverse of compounding — instead of growing money forward, you discount it backward. The higher the rate or the longer the wait, the smaller the present value.

Use the return you could realistically earn on the money instead — your 'opportunity cost.' That might be a safe rate like Treasury yields for low-risk comparisons, or an expected market return (say 6–8%) for investments. A higher discount rate reflects higher risk or better alternatives, and lowers the present value.

It's the foundation of comparing money across time — deciding between a lump sum now or payments later, valuing a lottery payout, pricing a bond, or evaluating an investment. Any time you weigh money you'd get at different times, converting everything to present value makes the comparison fair.