Present Value Calculator
Use this online PV calculator to easily calculate the Present Value, a.k.a. Present Worth of a future sum of money or stream of cash flow based on the rate of return and the investment term.
Using the PV calculator
Our Present Value calculator is a simple and easy to use tool to calculate the present worth of a future asset. All you need to provide is the expected future value (FV), the interest rate / return rate per period and the number of periods over which the value will accumulate (N). Once these are filled, press "Calculate" to see the present value and the total interest accumulated over the period.
What is Present Value?
The present value, a.k.a. present worth is defined as the value of a future sum of money or cash flow stream at present, given a rate of return over a specified number of periods. The concept reflects the time value of money, which is the fact that receiving a given sum today is worth more than receiving the same amount in some future date. It is practically compound interest calculation done backwards to find the amount you have to invest now to get to a desired amount in the specified point in the future. It is widely used in finance and stock evaluation, although Net Present Value (NPV) is often preferred by experienced experts.
NPV is used in financial analysis, investment assessment and accounting, e.g. in calculating capital expenditure and depreciation. The difference between PV and NPV is that present value doesn't take outflows into account while net present value does ("net" means combining positive and negative flows). To compare it to simpler concepts: PV is like revenue while NPV is like net income of a business or individual after deductions for expenses.
If you wonder how to calculate the Present Value (PV) / Present Worth (PW) by yourself or using an Excel spreadsheet, all you need is the formula:
where r is the return rate and n is the number of periods over which the return is expected to happen. For example, with a period of 5 years and expected future value of $1,000,000, given a return rate of 8%, n is 5, C1 is $1,000,000 and r is 0.08, leading to the calculation: 1000000 / (1.08)5 = $680583.20 .
This is a simple online PV calculator which is a good starting point in estimating the Present Value for any investment, but is by no means the end of such a process. You should always consult a qualified professional when making important financial decisions and long-term agreements, such as long-term bank deposits. Use the information provided by the calculator critically and at your own risk.
Cite this calculator & page
If you'd like to cite this online calculator resource and information as provided on the page, you can use the following citation:
Georgiev G.Z., "Present Value Calculator", [online] Available at: https://www.gigacalculator.com/calculators/present-value-calculator.php URL [Accessed Date: 18 Jun, 2019].