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Present value calculator
Our present value calculator takes a designated amount of future money and helps you understand how much that money would be worth today. Keep reading to see how our present value calculator works.
How to use our present value calculator
Copy link to sectionTo calculate present value with our calculator, follow these steps:
- Enter Future Value: Input the future value (FV) of the investment or amount of money you expect to receive.
- Enter Discount Rate: Input the discount rate as a percentage, which reflects the time value of money or expected rate of return.
- Enter Number of Periods: Input the number of periods (years) over which the money will be discounted.
- Calculate Present Value: Click the "Calculate Present Value" button to compute the present value (PV).
- Review the Present Value: The result will display the present value, which is the equivalent value of the future amount in today's terms.
How the present value calculator works
Copy link to sectionOur present value calculator essentially works backwards, taking a future amount of money and the interest rate you earned to get to that point, then telling you what amount you would have started with to arrive at that point. The two outputs that the calculator provides are present value and total interest.
Why should I use it?
Copy link to sectionThe time value of money is an essential concept to understand, since one pound today will be worth a different amount a year from now, due to inflation. By seeing the present value of future money, you can better understand that time value, and also make more informed decisions about your finances.
What is present value?
Copy link to sectionPresent value is the value of a sum of money right now, as opposed to a different value that this money will have in the future either through investment or inflation and interest.
