Present & Future Value Calculator

Calculate

Cash Flow Type

Amount

Discount / Growth Rate (per period)

Number of Periods

Annuity Timing

$6,806

Present Value

$10,000

Total Cash Flows

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How to Use This Present & Future Value Calculator

Calculate — choose present value (discount future money to today) or future value (grow today\'s money forward).
Cash Flow Type — a single lump sum or a recurring annuity payment.
Amount — the lump sum, or the per-period payment for an annuity.
Rate — your discount rate (for PV) or growth rate (for FV) per period.
Periods — number of periods; for annuities, set timing to ordinary or due.

What Is the Time Value of Money?

The time value of money is the principle that a dollar today is worth more than a dollar in the future, because today\'s dollar can be invested and earn a return. Present value (PV) answers "what is a future amount worth today?" by discounting it back at a chosen rate. Future value (FV) answers "what will today\'s amount grow to?" by compounding it forward.

This concept underpins nearly all of finance: investment valuation, lease-versus-buy decisions, loan pricing, and discounted cash flow (DCF) analysis all rest on it. An annuity extends the idea to a stream of equal payments — like lease payments or loan installments — and the timing (ordinary, at period end, versus due, at period start) slightly changes the value. Mastering PV and FV lets you compare money across different points in time on a fair, apples-to-apples basis.

Present & Future Value Formulas

PV (lump sum) = FV ÷ (1 + r)^n

FV (lump sum) = PV × (1 + r)^n

PV (annuity) = PMT × [1 − (1 + r)^−n] ÷ r

Example Calculation

What is $10,000 received in 5 years worth today, at an 8% discount rate?

PV = $10,000 ÷ (1.08)^5
PV ≈ $6,806

So a promise of $10,000 in five years is worth about $6,806 today at an 8% required return.

Common Mistakes to Avoid

Mismatching rate and period. If periods are months, use a monthly rate, not an annual one.
Using the wrong discount rate. The rate should reflect your real opportunity cost or required return.
Confusing ordinary and annuity-due timing. Payments at the start of a period are worth slightly more.
Forgetting that PV and FV are mirror images. Discounting and compounding use the same rate in opposite directions.

Time Value of Money for Business

Present and future value calculations are the backbone of sound financial decisions: valuing an acquisition, deciding whether to lease or buy equipment, pricing a payment plan, or running a DCF on a new project. Getting the discount rate and timing right is what separates a credible valuation from a rough guess.

Our financial modeling team builds these analyses for real decisions every day — from deal valuations to investment cases. If you are weighing something where timing and discounting matter, a free call is a fast way to get expert eyes on it.

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Frequently Asked Questions

What is present value?

Present value is what a future sum of money is worth today, after discounting it at a chosen rate to reflect the time value of money. A future dollar is worth less than a dollar today because today's dollar can earn a return.

What is future value?

Future value is what an amount of money today will grow to after a number of periods at a given growth rate, through compounding.

What discount rate should I use?

Use a rate that reflects your opportunity cost or required return — often your cost of capital. A higher discount rate lowers present value; the right rate depends on the risk of the cash flows.

What is an annuity?

An annuity is a series of equal payments over time, such as lease or loan payments. Its value depends on the payment size, rate, number of periods, and whether payments occur at the start (due) or end (ordinary) of each period.

What is the difference between PV and NPV?

Present value discounts a single future amount or annuity. Net present value (NPV) sums the present values of multiple cash flows, including the initial investment, to judge whether a project creates value.

Present Value & Future Value Calculator