Present Value Calculator
What future money is worth today, according to the discount rate.
Tip: PV = FV ÷ (1 + r)ⁿ — 1 million in 10 years is worth less today.
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About this digital tool
The present value (PV) calculator shows what an amount you will receive in the future is worth today when discounted at a given rate. Enter the future value, the discount rate and the number of years, and the tool gives the present value using the formula PV = FV ÷ (1 + r)^n. The idea rests on the time value of money: one lek today is worth more than one lek tomorrow.
It is used to value investments, contracts with deferred payments, the price of a bond, and to compare offers paying today against paying later. The discount rate should reflect the alternative return and the risk. The result is an estimate and depends heavily on the rate you choose.
How to use
- Enter the future amount (FV).
- Set the discount rate and the period.
- See the present value.
Frequently asked questions
Why is a future sum worth less?
Because today's money can be invested and earn interest. This is called the 'time value of money' — a foundation of finance.
How is present value calculated?
Divide the future value by (1 + r) raised to the number of years. For example, 1,000,000 lek in 5 years discounted at 5% is worth about 784,000 lek today.
What discount rate should I use?
Usually the return you could earn from an alternative with similar risk, such as a deposit or another investment. A higher rate gives a lower present value.
What is the difference between present value and net present value?
Present value (PV) discounts one or more cash flows. Net present value (NPV) is the PV of all inflows minus the initial investment, and shows whether a project creates value.