What discount rate should I use?

Use the return you could earn on a comparable-risk alternative. For safe cash flows, a government bond yield is common; for riskier cash flows, use a higher rate.

Where is present value used?

In valuing investments, comparing lump-sum versus instalment offers, pricing bonds, and any decision involving money received at different times.

What discount rate should I use?

Use the return you could earn on a comparable-risk alternative. For safe cash flows, a government bond yield is common; for riskier or uncertain cash flows, use a higher rate to reflect the chance you might not receive the full amount.

Why is present value lower than the future amount?

Because money today can be invested and grow. A future amount is worth less than the same nominal amount now, and the discount rate captures that opportunity cost over the waiting period.

Finance Calculators

Present Value Calculator

Present value is the reverse of future value: it tells you what a future amount is worth today, given an expected rate of return. It is the core of discounted cash flow analysis and helps compare money received at different times.

Enter the future amount, the annual discount rate, and the years until you receive it. The calculator returns what that future sum is worth in today’s money.

It is the core of discounted cash-flow thinking, useful whenever you must compare money received at different times — a future payout, a settlement, or a bond’s redemption value.

Future value

Annual discount rate%

Yearsyrs

Currency

Enter your values to see the result.

How this is calculated

Present value is the reverse of future value: it tells you what a future amount is worth today, given an expected rate of return. This calculator discounts a single future sum back to today: PV = FV ÷ (1 + r)^n, where FV is the future amount, r is the annual discount rate as a decimal and n is the number of years until you receive it.

The logic is opportunity cost: money you receive today can be invested and grow, so a future amount is worth less than the same nominal amount now. The higher the discount rate, the more the future sum is shrunk back to the present.

The model assumes a single future payment and a constant discount rate. It does not handle a series of future cash flows (each would be discounted separately and summed), taxes, risk premia for uncertain payments, or inflation explicitly — though the discount rate can be chosen to reflect expected inflation and risk. For a stream of equal payments, use the annuity payout calculator.

Worked example

You expect to receive $20,000 in 10 years. Use a 5% discount rate.

1Discount factor (1 + r)^n = 1.05^10 ≈ 1.6288.
2Present value = 20,000 ÷ 1.6288 ≈ $12,278.
3So $20,000 in ten years is worth about $12,278 today at a 5% rate — the rest is the opportunity cost of waiting.

Frequently asked questions

What discount rate should I use?: Use the return you could earn on a comparable-risk alternative. For safe cash flows, a government bond yield is common; for riskier cash flows, use a higher rate.
Why is present value lower than the future amount?: Money today can be invested and grow, so a future amount is worth less than the same nominal amount now. The discount rate captures that opportunity cost.
Where is present value used?: In valuing investments, comparing lump-sum versus instalment offers, pricing bonds, and any decision involving money received at different times.
What discount rate should I use?: Use the return you could earn on a comparable-risk alternative. For safe cash flows, a government bond yield is common; for riskier or uncertain cash flows, use a higher rate to reflect the chance you might not receive the full amount.
Why is present value lower than the future amount?: Because money today can be invested and grow. A future amount is worth less than the same nominal amount now, and the discount rate captures that opportunity cost over the waiting period.

Related calculators

Method: present value of a single future sum (discounting). No external data source. Last updated: September 2026.

These results are indicative estimates for planning only and do not constitute financial advice. Actual loan terms, tax rules, investment returns and product conditions vary by country, provider and your personal circumstances. Always confirm figures with your bank, tax authority or a qualified financial adviser before making decisions.