Present Value

Discount a future sum back to what it's worth today at a given annual rate — the core idea behind valuing investments and comparing payouts across time. Money later is worth less than money now.

Try it now

Worked example

Present value: $6,139.13

How it’s solved

Worked on the example above, step by step — follow along and you can do it on paper next time, no tool required.

Money in the future is worth less today; discount it by the growth it would otherwise have earned.
Growth factor = (1 + rate ÷ 100)^years
(1 + 5 ÷ 100)^10 = 1.628895
Divide the future amount by that factor
$10,000.00 ÷ 1.628895 = $6,139.13

Learn the method

Inputs

Future $
10000
Rate %/yr
5
Years
10

Frequently asked

How is present value calculated?

Present value = future value ÷ (1 + rate ÷ 100)ʸ, discounting the future amount over the number of years.

What rate should I use?

Use your required return or the interest you could otherwise earn; a higher discount rate lowers the present value.