How to use this calculator
- Future amount. Enter the sum that will be received or paid at a later date.
- Discount rate. Enter the yearly rate used to bring that sum back to today. This is often the return you could earn elsewhere on money of similar risk.
- Years. Enter how far in the future the amount is.
The results show three figures:
- Present value: what the future amount is worth today.
- Discount amount: the future amount minus the present value.
- Discount factor: the number you multiply the future amount by to get the present value.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Future amount
- $10,000
- Discount rate
- 5%
- Years
- 10 years
- Present value
- $6,139.13
- Discount amount
- $3,860.87
- Discount factor
- 0.6139
How present value is calculated
Present value is based on the time value of money: a dollar today is worth more than a dollar later, because today's dollar can be invested and earn a return in the meantime.
To find the present value, the calculator divides the future amount by 1 plus the discount rate, once for each year. This is compound growth run in reverse, and it is called discounting.
The discount factor is 1 divided by that growth. It is always between 0 and 1 when the rate is above 0. A factor of 0.80 means each $1 received at that future date is worth 80 cents today. Multiply the future amount by the factor to get the present value.
PV = FV ÷ (1 + r)^n, and Discount factor = 1 ÷ (1 + r)^n- PV
- present value
- FV
- future amount
- r
- yearly discount rate as a decimal
- n
- number of years
- FV − PV
- discount amount
What moves the result most
- The discount rate. A higher rate gives a lower present value. The rate stands for what you give up by waiting, so a higher rate means waiting costs more.
- The number of years. The further away the money is, the less it is worth today. At a given rate, each extra year shrinks the present value by the same proportion.
- Both together. A high rate over a long period can reduce a large future amount to a small present value.
Choosing the rate is the hard part, and it is a judgment call. People often use the return on a safe alternative for near-certain payments and a higher rate for uncertain ones. Try several rates to see how sensitive the answer is.
Present value is the building block for valuing a series of payments. The NPV calculator discounts many cash flows and subtracts the upfront cost. To go the other way and grow today's money forward, use the future value calculator. The NPV vs IRR guide explains how discounting is used to judge projects.
Frequently asked questions
What is present value?
Present value is what a future sum of money is worth today. Because money available now can be invested and grow, a payment you have to wait for is worth less than the same payment today. Present value puts a number on that difference by discounting the future amount at a chosen yearly rate over the waiting time.
What discount rate should I use?
Use a rate that reflects what the money could earn elsewhere at similar risk. For a payment that is almost certain, a low rate based on safe savings is common. For a risky payment, a higher rate is used to allow for the chance it does not arrive in full. Businesses often use their cost of capital.
Why is present value less than the future amount?
When the discount rate is above zero, waiting has a cost. You could have invested money received today and ended up with more by the future date. Discounting removes that missed growth, which leaves a smaller figure. Only at a rate of zero are the present value and the future amount the same.
What is a discount factor?
A discount factor is the present value of $1 received at a future date. It equals 1 divided by the growth of $1 over the period at the discount rate. Multiply any future amount by the factor to get its present value. The factor falls as the rate rises and as the number of years increases.
What is the difference between present value and net present value?
Present value is the value today of one future amount, or of a set of future amounts added together. Net present value goes one step further and subtracts the upfront cost needed to get those amounts. A positive net present value means the future cash is worth more today than it costs, at the rate used.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.