Quick answer: Present value discounts a future payment back to today's dollars: PV = FV / (1 + r)n. At a 6% discount rate, $100,000 received 10 years from now is worth about $55,840 today (about $54,963 with monthly compounding). The calculator also handles planned monthly deposits, so you can see what lump sum is still needed today.
Last reviewed: October 2026
Key facts
- A dollar today is worth more than a dollar tomorrow because today's dollar can earn a return; that is the time value of money.
- Higher discount rates shrink present value; longer waits shrink it too.
- Use a low rate (Treasury yields) for safe cash flows and a higher rate for risky ones.
- The calculator subtracts the present value of your planned deposits from the target, giving the lump sum still needed.
A present value calculator finds what a future payment is worth today. Enter the future amount, your planned monthly deposits, the annual discount rate, years, and compounding frequency to see the lump sum needed today, the total of your planned deposits, and their present value.
Present value is the workhorse of finance: it prices bonds and leases, compares a lottery lump sum with annuity payments, and tells you how much to invest today to hit a future goal. Discounting just reverses compounding.
How to use
- Enter the future amount needed (your goal, e.g. $100,000).
- Enter any monthly deposits planned (0 if you will only invest a lump sum).
- Enter the annual discount rate and the years until the money is needed.
- Choose the compounding frequency (monthly matches most savings plans).
- Click Calculate to see the lump sum needed today and how your planned deposits reduce it.
Present value formulas
For a stream of equal payments (an annuity), PV = PMT x (1 - (1 + r)-n) / r, with payments at the start of each period (annuity due) worth (1 + r) times more. The calculator nets the two: lump sum today = PV of the target minus PV of your planned deposits.
Worked examples
$100,000 in 10 years with monthly deposits
Target $100,000 in 10 years, discount rate 6%, monthly compounding, planned deposits $200/month. Discount factor = 1.005-120 = 0.5496. PV of target = $54,963. PV of deposits = $18,015. Lump sum needed today: $36,949. Without deposits you would need the full $54,963.
Annuity: $1,000 a year for 10 years
Receiving $1,000 at each year-end for 10 years at 6%: PV = 1000 x (1 - 1.06-10) / 0.06 = 1000 x 7.3601 = $7,360. Even though $10,000 is paid out in total, it is worth only $7,360 today at this discount rate.
Present value of $10,000 at 6% (annual compounding)
| Years away | Present value |
|---|---|
| 5 | $7,473 |
| 10 | $5,584 |
| 20 | $3,118 |
| 30 | $1,741 |
Frequently asked questions
What discount rate should I use?
Match the rate to the risk of the cash flow. For safe, near-certain payments, use a Treasury yield (around 4-5%). For stock-market-linked goals, use 7-8%. For a business project, use its cost of capital. A higher rate always lowers the present value.
What is the difference between present value and net present value?
Present value discounts one future amount (or one annuity) to today. Net present value discounts all of a project's cash flows and subtracts the upfront investment; a positive NPV means the project earns more than the discount rate demands.
What is annuity due versus ordinary annuity?
An ordinary annuity pays at the end of each period; an annuity due pays at the start. Because each payment of an annuity due is invested one period earlier, its present value is (1 + r) times larger. Rent is typically an annuity due; bond coupons are an ordinary annuity.
Should I take a lottery lump sum or annuity payments?
Discount the annuity payments at a realistic rate and compare with the lump sum. If the lump sum is bigger than the present value of the payments, take the lump sum. Lotteries usually discount at government bond rates, which favors the lump sum for most winners.
Why is present value lower when the discount rate is higher?
The discount rate represents what your money could earn elsewhere. A higher rate means today's dollar has more earning power, so less of it is needed to reach a future target. That is why the same $100,000 goal costs less upfront when rates rise.
How much is $100,000 in 20 years worth today?
At a 12% discount rate, $100,000 received in 20 years is worth only $10,366.68 today (100,000 / 1.12^20). Distant money is heavily discounted: the same $100,000 in 10 years at 12% would be worth about $32,197, nearly three times as much, because it is discounted for half as long.
How do I use NPV to accept or reject a project?
Discount every future cash flow and subtract the upfront cost: NPV above zero means accept, below zero means reject. Example: invest $10,000 now for $4,000 a year for 3 years at a 10% discount rate. The discounted inflows are $3,636.36 + $3,305.79 + $3,005.26 = $9,947.41, so NPV is $9,947.41 - $10,000 = -$52.59: essentially breakeven, and on a strict NPV rule you would reject it.
Sources
- Investopedia: present value formula for lump sums and annuities
- U.S. Securities and Exchange Commission (investor.gov): compounding, the inverse of discounting
Key takeaways
- PV = FV / (1 + r)n converts any future payment into today's dollars.
- $100,000 ten years out at 6% is worth about $54,963 today (monthly compounding).
- Planned monthly deposits reduce the lump sum you need now, dollar for discounted dollar.
- Use a discount rate that matches the risk of the cash flow you are valuing.
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