Present value calculator
Today’s value of a future sum or a stream of future payments, discounted at a chosen rate.
About the present value calculator
Today’s value of a future sum or a stream of future payments, discounted at a chosen rate.
Part of SmartCalcy’s investing & savings tools. It runs in your browser with no account, uses your own currency and units (change them at the top of the page), and gives estimates for information only, so check official guidance before you rely on a result.
How to use the present value calculator
What it calculates and when to use it
Present value tells you what money you will receive in the future is worth today, using a discount rate that reflects what you could earn or the risk you are taking.
How to use it, step by step
- Enter the future lump sum, and any regular payment you will receive.
- Choose how many payments a year, the discount rate and the years.
- Read the present value and how much is lost to waiting.
What each input means
- Discount rate – The rate used to bring future money back to today.
- Payments at the start – Treats each payment as arriving at the beginning of its period.
How to read the results
- Present value – Lump sum and payments valued today.
- Value lost to waiting – Total cash received minus its present value.
The formula
PV = FV ÷ (1 + r)^n + PMT × (1 − (1 + r)^−n) ÷ r. r is the rate per period and n the number of periods.
A worked example
A lump sum of 20,000 in 10 years at a 5% discount rate is worth 12,143.22 today. The 7,856.78 difference is the cost of waiting.
Assumptions and limits
- The discount rate is constant.
- Inflation can be included by using a real rate.
Common mistakes
- Using too low a discount rate for risky money.
- Mixing yearly rates with monthly periods.
Frequently asked questions
What discount rate should I use?
Use the return you could earn on a similar-risk alternative.
Related tools
Details
- Lump sum, valued today
- £12,143.22
- Total received
- £20,000.00
- Value lost to waiting
- £7,856.78