Present Value Calculator
Calculate what future money is worth today with our Present Value Calculator. Understand the time value of money and make better financial decisions.
Value Discounting Over Time
Present Value Formula
Present Value by Compounding Frequency
| Compounding | Present Value | Discount Factor | Effective Rate |
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Common Use Cases
Compare investment options by calculating present value of future returns
Discount projected cash flows to determine business worth today
Calculate fair value of bonds using present value of coupon payments
Determine how much to invest today to reach future financial goals
Key Features
How to Use This Calculator
Understanding Present Value
Present Value (PV) is a fundamental financial concept that determines what future money is worth today. A rupee today is worth more than a rupee tomorrow because money has time value - it can be invested to earn returns.
The present value formula is: PV = FV / (1 + r)^n, where FV is the future value, r is the discount rate per period, and n is the number of periods. This reverses the compound interest calculation.
Present value helps answer questions like: "Is ₹10 lakhs now better than ₹15 lakhs in 5 years?" At a 10% discount rate, ₹15 lakhs in 5 years has a present value of ₹9.31 lakhs - so ₹10 lakhs now is better.
The discount rate represents your opportunity cost - the return you could earn elsewhere. Higher discount rates reduce present value because future money is less valuable when opportunity cost is high.
Present value is essential for evaluating investments, comparing payment options, valuing businesses, and making any financial decision involving future cash flows. It's the foundation of discounted cash flow (DCF) analysis.