Present Value Calculator
Calculate the present value of future money or annuity payments
Present Value Calculator
Calculate the present value of future money or annuity payments. Use our comprehensive present value calculator to determine the current worth of future cash flows based on a discount rate.
đ° Present Value Calculation
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Summary
To have $1,000 in 10 years at a 6% annual interest rate, you need to invest $558.39 today.
đ Understanding Present Value
What is Present Value?
Present Value (PV) is the current worth of a future sum of money or stream of cash flows given a specified rate of return. It's the foundation of time value of money calculations.
Time Value of Money
Money available today is worth more than the same amount in the future due to its potential earning capacity. This is the core principle behind present value calculations.
Investment Decisions
Present value helps compare investment opportunities, determine loan amounts, and make informed financial decisions by standardizing future cash flows to today's dollars.
Present Value Formula
The present value formula discounts future cash flows back to their current worth:
PV = FV / (1 + r)^n
- PV: Present Value
- FV: Future Value
- r: Interest rate per period
- n: Number of periods
Net Present Value (NPV)
NPV represents the net of all cash inflows and outflows, similar to net income. It's used to evaluate the profitability of investments and projects by comparing the present value of cash inflows to the present value of cash outflows.