Present Value Calculator
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Present Value (PV) calculates what a future sum of money is worth today, given a discount rate. It answers: "How much do I need to invest today to have $X in the future?" It is the inverse of future value and the cornerstone of financial valuation.
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Tip: The discount rate you use dramatically changes the result. For personal planning, use your expected investment return. For business decisions, use the Weighted Average Cost of Capital (WACC).
- 1PV of lump sum: PV = FV / (1 + r)^n
- 2PV of annuity: PV = PMT × (1 − (1+r)^(−n)) / r
- 3Higher discount rates reduce present value (future money is worth less)
- 4The discount rate often represents opportunity cost or inflation
$100,000 needed in 10 years, 7% discount rate=PV = $50,835You need $50,835 today invested at 7%
$1,000/year for 20 years at 6%=PV = $11,470The lump sum equivalent of that annuity
| Discount Rate | 10 years | 20 years | 30 years |
|---|---|---|---|
| 3% | $74,409 | $55,368 | $41,199 |
| 5% | $61,391 | $37,689 | $23,138 |
| 7% | $50,835 | $25,842 | $13,137 |
| 10% | $38,554 | $14,864 | $5,731 |
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Fun Fact
A lottery winner who wins $1 million paid over 20 years is actually receiving far less than $1 million in present value. At a 5% discount rate, 20 annual payments of $50,000 have a present value of only about $623,000.
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