Present Value Calculator

Discount a future amount back to today’s value using an annual discount rate, and compare lump sums with later payments.

Discount a future amount back to present value using an annual rate.

Future value

Annual rate

Years

years

Present value

$11,168

Results are estimates for informational purposes only.

How to use this calculator

What present value means

Present value answers the reverse of future value: how much is a future payment worth today? Money you receive later is worth less than money you have now, because money in hand can earn a return in the meantime. The rate used to discount the future amount, called the discount rate, is the return you could otherwise earn.

At a 6% discount rate, $20,000 received 10 years from now is worth $11,167.90 today. Put another way, investing $11,167.90 today at 6% a year would grow to $20,000 in 10 years.

Common uses

Comparing a lump sum with a later payment: if you are offered $15,000 now or $20,000 in 10 years, the later payment is worth about $11,168 today at 6%, so $15,000 now is the better deal unless you expect to earn less than about 2.9% a year.

Planning for a target: if you need $50,000 in 15 years and expect 5% a year, present value gives the single amount to set aside today, about $24,051.

Valuing settlements, pensions, or business cash flows follows the same idea, with each payment discounted back to today and the results added together.

Choosing the discount rate

The result depends heavily on the rate. $100,000 due in 20 years is worth about $55,368 today at 3%, but only about $25,842 at 7%. Use the return you could realistically earn on money with similar risk: a savings or Treasury rate for a guaranteed payment, a higher rate for an uncertain one.

Discounting at the expected inflation rate instead shows what a future amount will be worth in today’s purchasing power.

You can also review Compound Interest Calculator and Investment Growth Calculator to compare scenarios.

Formula

Present value = future value ÷ (1 + r)^n
r = annual discount rate as a decimal; n = number of years

Example: $20,000 in 10 years at 6%

Discount factor: 1.06^10 ≈ 1.7908.
Present value: $20,000 ÷ 1.7908 = $11,167.90.
Check: $11,167.90 invested today at 6% grows to $20,000 in 10 years.

Present value of $100,000

What $100,000 received in the future is worth today, discounted once a year.

Annual rate	Years	Present value
3%	5 years	$86,261
3%	10 years	$74,409
3%	20 years	$55,368
5%	5 years	$78,353
5%	10 years	$61,391
5%	20 years	$37,689
7%	5 years	$71,299
7%	10 years	$50,835
7%	20 years	$25,842

Frequently asked questions

What discount rate should I use?

Use the annual return you would expect from an alternative with similar risk. For a guaranteed payment, a Treasury or CD rate is reasonable. For a riskier payment, use a higher rate to reflect the chance it is not paid in full.

Why is present value lower than the future amount?

Because money available today can earn interest. A dollar received in 10 years misses 10 years of potential growth, so it is worth less than a dollar now. The higher the rate or the longer the wait, the bigger the discount.

Should I take a lump sum or payments over time?

Compare the lump sum with the combined present value of the payments: discount each payment back to today and add them up. If the lump sum is larger, it is usually the better deal before taxes. Taxes and your own spending discipline can change the answer.

Is present value the same as net present value (NPV)?

NPV adds up the present values of several cash flows, including any upfront cost, to judge whether an investment is worth making. This calculator handles one future amount, the building block of an NPV calculation.