What future money is worth today
This present value calculator tells you what a future sum of money — or a stream of equal future payments — is worth in today's dollars. Pick Lump sum to discount a single future amount, or Annuity to discount a series of equal payments. It supports annual or monthly compounding and ordinary vs annuity-due timing, and shows the discount factor, total nominal dollars, and the discount applied. Everything is calculated privately in your browser, free.
Suppose someone offers you $10,000 ten years from now and your discount rate is 6% per year, compounded annually. The per-period rate is i = 0.06 and the number of periods is n = 10, so:
PV = FV / (1 + i)^n
PV = 10,000 / (1.06)^10
PV = 10,000 / 1.790847
PV = $5,583.95So receiving $10,000 in 10 years is worth only $5,583.95 today at a 6% discount rate. The remaining $4,416.05 is the time-value cost of waiting. For an ordinary annuity of $1,000 per year for 10 years at 6%, PV = 1,000 × [1 − (1.06)−10] / 0.06 = $7,360.09; the same stream as an annuity-due is worth (1.06)× more, or $7,801.69.
This tool uses the standard nominal annual rate compounded m times convention (i = annual_rate / m), matching Excel's PV() function and financial calculators like the HP 12C and TI BA II Plus. It is not the same as de-compounding an effective-annual rate — the EAR readout makes the difference explicit (6% nominal monthly = 6.17% EAR). The annuity model assumes payments and compounding occur at the same frequency (a textbook "simple annuity"); it does not model general annuities where payment and compounding frequencies differ. The number of periods is rounded to the nearest whole period. Results are in nominal dollars unless you enter a real (inflation-adjusted) rate; the tool does not separately model inflation.
This is an educational estimate, not financial advice. Real instruments carry credit risk, taxes, fees, inflation, and uncertain cash flows that a deterministic present value ignores. Choosing the right discount rate is the hard part and is your responsibility. Confirm important decisions with a licensed advisor.
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Present value (PV) is what a future amount of money is worth in today's dollars. Because money you have now can earn a return, a dollar in the future is worth less than a dollar today. PV discounts future cash back to the present using a discount rate.
A higher discount rate means future money is worth less today, so PV falls. A lower rate raises PV. The discount rate reflects your required return or opportunity cost, and choosing it is the hardest, most judgment-heavy part of the calculation.
An ordinary annuity pays at the end of each period (most loans and bonds); an annuity-due pays at the beginning (rent, leases, some pensions). Because due payments arrive one period earlier, an annuity-due is worth exactly (1 + i) times more than an otherwise-identical ordinary annuity.
With monthly compounding the tool uses a per-period rate of annual rate / 12 over 12 periods per year (the standard nominal-rate convention used by Excel PV() and financial calculators). A 6% nominal rate compounded monthly equals a 6.17% effective annual rate, so the discounting differs slightly from a plain annual calculation.
At a 0% discount rate there is no time-value adjustment, so present value equals the nominal total: a lump sum's PV equals the future value, and an annuity's PV equals the payment times the number of periods. The tool branches to these limit forms to avoid dividing by zero.
No. It's an educational estimate that assumes fixed, certain cash flows. Real instruments involve credit risk, taxes, fees, inflation, and variable payments a deterministic PV ignores. Confirm important decisions with a licensed advisor.
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