Present Value Calculator
Calculate the present value of a future sum of money at a specified rate of return with our free online calculator.
Category: Financial
Present Value Calculator
Frequently Asked Questions
What is present value?
Present value (PV) is the current worth of a future sum of money at a specified rate of return. It represents how much you would need to invest today to reach a specific financial goal in the future, taking into account the time value of money.
How is present value calculated?
Present value is calculated using the formula: PV = FV / (1 + r)^t, where FV is the future value, r is the interest rate (as a decimal), and t is the time period in years. This formula 'discounts' the future value back to its present equivalent.
What is the difference between present value and future value?
Present value is today's value of a future sum of money, while future value is what an amount of money invested today will be worth at a future date. They're inversely related - present value calculates backward from a future amount, while future value projects forward from a present amount.