Finance
Calculator for Present Value
Find wetin future sum worth today at the discount rate wey you choose — the time value of money — and see the discount amount beside am.
Add to workspaceYour numbers
Compounding na yearly. Results dey update as you dey type. All calculations dey run inside your browser on your device.
Present value
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Formula
PV = FV ÷ (1 + r)n, where FV na future sum, r na yearly discount rate as decimal, and n na number of years. Discount na FV − PV: the amount wey waiting dey remove from the future sum's value today. This na compound growth for reverse — we dey run the future value formula backwards.
Example wey show the calculation
$10,000 wey go come in 10 years at 5% yearly discount rate get present value of $6,139.13 and discount of $3,860.87. If e go come in 5 years instead, present value na $7,835.26 and discount na $2,164.74. If waiting time double, discount no automatically double: the formula dey compound the discount factor.
Where e fit work and limits
This page dey discount one lump sum with constant yearly rate and yearly compounding. E no handle payment series (you need annuity calculation for that), rate wey change with time, monthly compounding, taxes or inflation adjustments. Nominal discount rate and real rate (after inflation adjustment) dey give different answers. Na the rate wey you choose dey drive everything: small change in r fit move present value well well over long periods, so use the result to compare options, no treat am as market price.
Questions wey people dey ask often
Why future money worth less today?
Because you fit invest money today make e grow. $6,139.13 wey you invest at 5% for 10 years go become $10,000, so both amounts get equal value at that rate — neither na bargain; na the same value at different times.
Which rate I suppose use?
E depend on the question. For investment decision, use the return wey you expect or your cost of capital. If you dey compare offers, use the same rate for every option make the comparison fair. No single rate dey correct for every case.
How this one differ from future value calculator?
Dem dey reverse each other. Future value dey grow present sum forward (multiply by (1 + r)n); present value dey bring future money back to today (divide by (1 + r)n). Na the same formula, but e dey go the other way.
Higher rate dey increase or reduce present value?
E go lower. Higher discount rate dey reduce future money's value today more heavily. At 10% instead of 5%, the same $10,000 for 10 years worth only $3,855.43 today.
What if interest dey compound every month?
If interest dey compound monthly, wetin you divide by go be (1 + r/12)12n, so the present value go small pass the yearly-compounding figure a little. This page dey use yearly compounding and e tell you so; for monthly schedules, adjust the rate and periods to match.
Present value fit be negative?
This page dey accept amounts wey no negative and show discounted values wey no negative. For future liability, enter the positive amount and read the result as the corresponding cost today. Cash flows with positive and negative signs need another model.
Other tools wey relate to dis
- Calculator for Future Value — the same formula forward: wetin one lump sum go grow reach
- Calculator for compound interest — growth when you dey add money regularly
- Calculator for savings target — money wey you need save monthly to reach target
Results na estimates; dem no replace advice from qualified professional.