Present value calculator
Enter a future amount, rate and years, get its value today.
What is present value?
What a future amount is worth today, given a rate of return. $10,000 received in 10 years is worth $6,139.13 today at 5% a year.
What is the formula?
PV = FV ÷ (1 + i)ⁿ — the future value discounted by the rate per period i over n periods.
Which rate should I use?
The return you could earn elsewhere with similar risk — a savings rate for safe money, a higher rate for riskier alternatives. A higher rate makes the present value smaller.
How is it used?
To compare money at different times: a lump sum now against payments later, or whether an investment's future payoff is worth its price today.
Does compounding frequency matter?
A little: discounting monthly at 5% gives a slightly lower present value than discounting yearly — $6,071.61 against $6,139.13 for $10,000 in 10 years.
Should I use a real or a nominal discount rate?
Match the rate to the money. OMB Circular A-94 says a real discount rate, which has the effect of expected inflation removed, should be used for amounts in constant dollars, and a nominal rate, which includes expected inflation, for amounts in nominal dollars; most market interest rates are nominal. A real rate can be approximated by subtracting expected inflation from a nominal rate. This calculator discounts whatever you enter, so use a nominal rate for a fixed dollar amount you will receive later.
Is $10,000 now better than $11,000 in two years?
Compare them in the same year. At a 5% discount rate, $11,000 in two years is worth $9,977.32 today, a little less than $10,000 now, so taking the money now is better at that rate. At a lower rate the later payment would win, which is why the answer depends on the rate you can earn on your own money and the risk of waiting.
How present value works
Present value reverses compounding. If money earns i per period, an amount today becomes (1 + i)ⁿ times larger after n periods, so an amount due then is worth FV ÷ (1 + i)ⁿ now. OMB’s Circular A-94 calls 1 ÷ (1 + rate)ᵗ the discount factor and notes that benefits and costs are worth more if they are experienced sooner, which is why future amounts are discounted. For monthly or quarterly discounting, i is the yearly rate divided by the periods in a year and n counts the periods.
Worked example: $10,000 in 10 years
At 5% a year the discount factor for 10 years is 1 ÷ 1.05¹⁰ = 0.6139, so the present value is $10,000 × 0.6139 = $6,139.13. The rate matters a lot: the same payment is worth $7,440.94 at 3% and $5,083.49 at 7%. Circular A-94 makes the same point, that the higher the discount rate, the lower the present value of future amounts. Discounting monthly at 5% lowers the figure to $6,071.61.
Common mistakes
Using a rate that does not match the money is the first: a nominal rate applied to inflation-adjusted amounts, or the reverse, distorts the answer, as Circular A-94 explains. Entering months in the years box is the second; the field takes years, even when you choose monthly discounting. Picking the rate by habit is the third: a savings rate suits a safe payment, a risky one deserves a higher rate, and a small change in the rate moves the result a lot. Finally, this page discounts a single payment; for a series, each payment must be discounted for its own date.
Sources: Office of Management and Budget, Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs (revised November 9, 2023), section 8 on discount rate policy and the glossary entry for the discount factor; the single-payment formula is also developed in OpenStax, Principles of Finance, chapter 7, “Time Value of Money I: Single Payment Value.” Grow money forward with the future value calculator, compare projects with the NPV calculator and remove inflation with the real return calculator.
Estimates for planning only — not financial advice. Your bank's disclosures decide. How we check our calculators.