Present Value (PV) answers a simple question: What is a future amount of money worth today? This free calculator discounts future cash flows into “today dollars” using your interest (discount) rate and the number of periods. It supports three popular scenarios: a future lump sum, a level-payment annuity, and a growing annuity (payments that rise each period).
Choose a scenario, add the amounts, and set the discount rate + number of periods. Use the same “period” unit everywhere (years, months, weeks, etc.). For example, if your rate is 6% per year, then periods should be years.
Present Value is one of the most useful “money math” ideas you’ll ever learn because it gives you a common language for comparing choices that happen at different times. If one option pays you now and another option pays you later, PV converts them into the same unit: today’s value. Once everything is expressed as PV, comparisons become simple.
Here’s the intuition: money today is usually worth more than money tomorrow. Why? Because money today can be invested, used to pay down debt, or simply kept as a safety buffer. Even if you do nothing fancy, having money earlier gives you flexibility. PV captures that advantage using a number called the discount rate (often the interest rate, opportunity cost, or required return).
If you can earn a return of r per period, then $1 today becomes $(1+r) next period. Flip that around: $1 next period is worth 1/(1+r) today. That flip is the discounting process. When you discount a future amount n periods, you discount repeatedly:
Example: Imagine you’ll receive $10,000 in 10 years and your discount rate is 7% per year. The PV is $10,000 / (1.07)10. That’s about $5,083. In other words, at 7%, receiving $10,000 ten years from now is “equivalent” to receiving about $5,083 today. If someone offered you $5,083 now instead of $10,000 later, your decision depends on whether 7% is a fair rate for you and your risk tolerance.
A lot of real life looks like a stream of payments rather than one single payment: rent, loan payments, subscription revenue, pensions, or a savings plan. If the payment amount is the same each period, that stream is called an annuity. The PV of an ordinary annuity (payments at the end of each period) is:
There’s also an “annuity due” variant where payments happen at the beginning of each period. If you pay rent at the start of the month, that’s annuity due. The PV of an annuity due is simply the ordinary annuity PV multiplied by (1+r), because every payment shifts one period earlier:
In the real world, payments sometimes grow each period. Salaries often rise. Subscription revenue might grow. Dividends can grow. When payments grow at a constant rate g per period, you have a growing annuity. The PV of a growing annuity (ordinary timing) is:
Important: This formula behaves nicely only when r ≠ g. If r is very close to g, PV becomes very sensitive and you should sanity-check the result. In general, when the discount rate r is higher than the growth rate g, discounting “wins” and PV stays finite. If g is greater than r for a long time horizon, the present value can blow up in a way that’s not realistic unless the growth is truly sustainable.
Most everyday PV calculations use discrete compounding with (1+r)n. But in some finance contexts, you’ll see continuous compounding. Continuous discounting uses the exponential function:
In this calculator, selecting Continuous applies the exponential discount for the lump sum case. For annuities, finance typically assumes discrete period payments; continuous cash flow PV is a different setup (an integral). So for annuity and growing annuity, we keep the standard discrete formulas and simply label the compounding method for clarity.
The most common PV mistake is using a rate that doesn’t match the situation. Here are practical ways people choose a discount rate, depending on what they’re doing:
There’s no single “correct” rate for everyone. That’s why PV is powerful: you can run a few scenarios (say 3%, 7%, 12%) and see how sensitive your decision is. If your choice flips wildly when the rate changes a bit, you’re looking at a decision where assumptions matter a lot.
Finally, a note about “virality”: PV is secretly a social game because it reveals how different people think about patience, risk, and the future. If you want a shareable post, try this: choose a future amount (like $20,000 in 5 years) and ask friends what they’d accept as a “fair” amount today. Then calculate the implied discount rate. You’ll usually see a huge range—and that’s a great conversation starter.
They’re two sides of the same coin. An interest rate grows money forward in time. A discount rate brings money back to today. If the rate is 6% per year, then $1 today becomes $1.06 next year, and $1 next year is worth $1/1.06 today.
Periods should match the rate. If your rate is per year, use years. If your rate is per month, use months. If you only know an annual rate but want monthly periods, convert the rate (roughly r_month ≈ r_annual/12 for small rates, or (1+r_annual)^(1/12)-1 for effective monthly).
Discounting compounds, just like interest. The longer you wait and the higher the rate, the more times you divide by (1+r). That exponential effect is why PV strongly penalizes distant cash flows.
That’s an annuity due. In this calculator, choose “Beginning of each period.” The PV increases because you’re receiving payments earlier, so they are discounted fewer times.
Yes—loans are often the reverse: the loan amount is the PV of future payments. If you know the payment, rate, and number of periods, the annuity PV formula explains why a loan has a particular principal balance.
Not automatically. If you want “real” PV (inflation-adjusted), use a real discount rate. If you’re working in nominal dollars (including inflation), use a nominal discount rate. The key is consistency.
Some finance formulas use continuous compounding (common in derivatives). For everyday personal finance, discrete compounding is typical. Continuous is included for completeness and quick comparisons.
Helpful math, finance, and health tools to pair with present value.
MaximCalculator provides simple, user-friendly tools. Always double-check important calculations, and consider risk, inflation, and taxes when making real-world decisions.