The present value formula
Present value (PV) answers a core finance question: what is money you will receive in the future worth right now? Because money can earn a return, a dollar today is worth more than a dollar tomorrow. The formula is PV = FV ÷ (1 + r ÷ 100)years, where FV is the future value, r is the annual discount rate, and years is the time until you receive it. It is the exact inverse of the future value calculator.
How to use this calculator
Enter the future value you expect to receive, the annual rate you would otherwise earn (the discount rate), and the number of years until you get it. The result shows today's equivalent value and how much was discounted away. A higher discount rate or longer wait makes the future sum worth less today. If you want the growth broken out period by period, use the compound interest calculator.
Worked example
You are promised $10,000 in 10 years and your discount rate is 7%. PV = 10,000 ÷ (1 + 0.07)10 ≈ $5,083.49 — barely half its face value, because waiting a decade costs you the return you could have earned. The discount rate drives the result:
| Discount rate | PV of $10,000 in 10 yrs |
|---|---|
| 3% | $7,441 |
| 5% | $6,139 |
| 7% | $5,083 |
| 10% | $3,855 |
These figures are an estimate for general information only and are not financial advice; consult a qualified professional before making money decisions. Choosing a discount rate is easier once you know the inflation calculator's figure for the period.
Frequently asked questions
- What is $10,000 in 10 years worth today?
- Discounted at 7%, $10,000 received in 10 years is worth about $5,083.49 in today's dollars.
- What is present value?
- Present value is the current worth of a future sum of money, discounted at a rate that reflects what you could earn by investing today instead.
- What discount rate should I use?
- Use the return you could realistically earn on a comparable investment, or your cost of capital. A higher rate lowers the present value.
- How does present value relate to future value?
- They are inverses. Future value grows money forward in time; present value discounts a future amount back to today using the same factor.
- What if the money arrives in months, not years?
- Convert the wait into a fraction of a year before entering it, so 18 months becomes 1.5 years. Alternatively use a monthly rate with the number of months. The rate and the time period must always be in matching units or the result will be wrong.