What is present value?

Present value (PV) is the current worth of a future sum of money, discounted at a specific rate of return. The idea is that a dollar today is worth more than a dollar in the future because today's dollar can be invested to earn a return.

What discount rate should I use?

The discount rate represents the opportunity cost of capital, i.e., the return you could earn on an alternative investment of similar risk. Common choices include the risk-free rate (Treasury yield), your weighted average cost of capital (WACC), or an expected market return such as 7–10% for equities.

What is the difference between a lump sum and an annuity?

A lump sum is a single payment made or received at one point in time. An annuity is a series of equal payments made at regular intervals (e.g., $500 every year for 10 years). This calculator handles both modes.

What formula does the lump sum mode use?

PV = FV / (1 + r)^n, where FV is the future value, r is the discount rate per period, and n is the number of periods.

What formula does the annuity mode use?

PV = PMT × [1 − (1 + r)^(−n)] / r, where PMT is the payment per period, r is the discount rate, and n is the number of periods. This calculator uses an ordinary annuity (payments at the end of each period).

Can I use periods other than years?

Yes. If your payments are quarterly, enter your quarterly rate (annual rate ÷ 4) and the total number of quarters. The calculator is period-agnostic; the table header labels each row "Period N" rather than "Year N".

Present Value Calculator

Name: Present Value Calculator
Availability: InStock
Author: Nham Vu

Enter a future value or periodic payment, discount rate, and periods to instantly see the present value plus a year-by-year discounting table.

Cash Flow Type

Future Value (FV)

Discount Rate (% per period)

Number of Periods

Present Value

—

Total Cash

—

Discount

—

Formula:

Period-by-Period Discount Table

Period	Cash Flow	Discount Factor	PV of Cash Flow	Cumulative PV

Fill in the inputs and click Calculate

Summary

Enter a future value or periodic payment, discount rate, and periods to instantly see the present value plus a year-by-year discounting table.

How it works

Select Lump Sum to discount a single future payment, or Annuity to discount a stream of equal periodic payments.
Enter the future value (lump sum) or the periodic payment amount (annuity).
Enter the annual discount rate as a percentage (e.g., 8 for 8%).
Enter the number of periods (years, quarters, etc.) until the cash flow is received.
The present value is calculated instantly and a discount table appears below.
Read the PV, total undiscounted cash, and total discount (opportunity cost) from the results panel.

Use cases

Valuing a bond or investment that pays a lump sum at maturity.
Deciding whether a lottery annuity or lump-sum payout is worth more today.
Comparing lease vs. buy decisions by discounting future lease payments.
Teaching or learning the time value of money concept step by step.
Estimating the present cost of a future liability such as decommissioning costs.
Evaluating structured settlement offers against their present worth.

Frequently Asked Questions

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Last updated: 2026-05-23 · Reviewed by Nham Vu