Present value calculator (discounting)
Money received in a few years is worth less than money today. Bring it back to its present value with a yearly rate, for one amount or a list of yearly amounts.
Result
8,219.27Present value
- Total without discounting
- 10,000.00
- Gap due to discounting
- 1,780.73
Inputs
- I am computing for
- One amount
- Amount received later
- 10000
- In how long
- 5
- Discount rate per year
- 4
How it is calculated
Convention: yearly rate compounded once a year, time in whole or fractional years (no day count).
Result
Present value
- Total without discounting
- 10,000.00
- Gap due to discounting
- 1,780.73
How it is calculated
- Convention: yearly rate compounded once a year, time in whole or fractional years (no day count).
- One amount: PV = amount ÷ (1 + rate)^years.
- Series: PV = Σ amount_k ÷ (1 + rate)^(k + d), with d = 1 if the first amount comes in one year, 0 if today.
Example
10,000 received in 5 years, discounted at 4% a year, is worth 8,219.27 today: discounting takes away 1,780.73.
Good to know
- Constant rate over the whole period.
- Series amounts exactly one year apart.
Frequently asked questions
What is this tool used for?
Money received in a few years is worth less than money today. Bring it back to its present value with a yearly rate, for one amount or a list of yearly amounts.
How is the result calculated?
Convention: yearly rate compounded once a year, time in whole or fractional years (no day count).
What should I check before using the result?
Constant rate over the whole period.