What Is That Future Money Worth in Today's Dollars?
What is that future payment worth today?
Present Value Calculator
Lump Sum & Annuity PV · Discount Rate Sensitivity · Period Scenarios
Results update in real time as you adjust any input.
Bonds: 3-5% · Equities: 7-10% · Business: 10-15%
Calculates implied annual return
Results are estimates only and do not constitute financial, tax, or legal advice. Consult a qualified professional before making financial decisions.
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A dollar today is worth more than a dollar tomorrow — that's the foundational principle behind every serious financial decision. Present value (PV) is the tool that lets you translate any future amount back into today's dollars, so you can make apples-to-apples comparisons across time. When someone offers you a settlement of $50,000 in three years vs $40,000 today, present value tells you which is actually more valuable depending on what you could earn on that money in the meantime. When a business evaluates a project that pays off over 10 years, present value tells them whether those future returns are worth the upfront investment. The calculation requires just three inputs: the future value (or stream of cash flows), the number of periods, and a discount rate — the rate of return you could earn on an alternative investment of similar risk. The higher the discount rate or the further out the payment, the lower its present value. This calculator handles both lump-sum PV and annuity PV (equal payments over time), computes the implied discount rate if you know both present and future values, and shows a year-by-year present value decay table so you can visualize exactly how time erodes the worth of future money. Use it whenever you need to evaluate deferred payments, structured settlements, or the value of any income-producing asset.
- →Comparing a lump sum offer today vs payments spread over several years
- →Evaluating whether a structured settlement, buyout, or deferred compensation offer is fair
- →Calculating the current value of a bond's future coupon and principal payments
- →Determining what a series of rental income payments is worth today
- →Justifying a capital investment whose returns come years in the future
Kevin won a legal settlement offering him two choices: $75,000 paid out over 5 years ($15,000/year) or $58,000 as a lump sum today. He uses the present value calculator with a 7% discount rate — what he believes he could earn investing the lump sum. The PV of the 5-year annuity comes to $61,500. Since $61,500 > $58,000, the payment plan is technically worth more — but only barely. Considering taxes, flexibility, and the risk that future payments might not come, he takes the lump sum.
What discount rate should I use for present value calculations?
Use the rate of return you could earn on an alternative investment of similar risk. For low-risk comparisons, use Treasury bond rates (4-5%). For stock-market-risk decisions, use 8-10%. For business decisions, use your weighted average cost of capital (WACC).
What's the difference between present value and net present value?
Present value (PV) calculates the current worth of future cash flows. Net present value (NPV) subtracts the initial investment from the PV of future cash flows. NPV tells you whether a project creates value; PV is the building block of that calculation.
What is an annuity PV vs a lump sum PV?
Lump sum PV discounts a single future payment back to today. Annuity PV discounts a series of equal periodic payments. An ordinary annuity assumes payments come at the end of each period; an annuity due assumes payments come at the beginning.
How does inflation affect present value?
Inflation reduces purchasing power over time. You can incorporate inflation by using a real discount rate (nominal rate minus inflation) to get present value in today's purchasing power, or use a nominal discount rate to get the nominal present value.