How this calculator works
Present value of a lump sum: PV = FV ÷ (1 + r)^n, where r is the yearly rate and n the number of years.
Present value of equal yearly payments (an annuity): PV = payment × (1 − (1 + r)^−n) ÷ r.
The discount rate reflects what you could earn elsewhere, or the return you require. A higher rate makes future money worth less today.
The discount factor, 1 ÷ (1 + r)^n, is what each future dollar is worth now.
Worked example
$50,000 in 10 years at 6%
- Discount factor: 1 ÷ 1.06¹⁰ = 0.5584.
- Present value: $50,000 × 0.5584 = $27,920.
- In other words, $27,920 invested at 6% today grows to $50,000 in 10 years.
Questions people ask
What discount rate should I use?
Use the return you could realistically earn on money with similar risk, such as a bond yield for safe cash flows or a higher rate for riskier ones.
How is present value used?
To compare a lump sum with a payment plan, value a business or bond, or decide whether an investment beats its cost.
What is net present value (NPV)?
The present value of all future cash flows minus the upfront cost. A positive NPV means the investment beats your discount rate.
Should I take a lottery lump sum or annuity?
Compare the lump sum with the present value of the annuity at a realistic rate, then consider taxes and your own discipline.
Last reviewed October 2, 2026