# Present Value (PV) Calculator

LAST UPDATE: September 25th, 2020

## What is Present Value (PV)?

Present Value (PV) is the value of future money in today’s dollars. It uses a future value of money and a rate of return to calculate today’s value.

A common question that present value addresses is “how much money do I need right now to have a savings goal in the future?”

There are also present value calculations for an annuity, an annuity due, a perpetuity, and a growing perpetuity.

## Formula – How Present Value is calculated

Present Value = Future Value ÷ (1 + Rate of Return)Number of Periods

Where:

• Future Value” is a sum of money in the future.
• Rate of return” is a decimal value rate of return per period (the calculator above uses a percentage). A return of “2.2%” per year would be calculated as “0.022.”
• Number of Periods” are the number of compounding periods.

### Examples

What is the present value of \$2,000, 10 years from now, assuming a  2.2% annual rate of return?

Present Value = 2000 ÷ (1 + 0.022)10

Present Value = 2000 ÷ 1.02210

Present Value = 2000 ÷ 1.243108

Present Value = 1,608.87

What is the present value of \$1000, 48 months from now, assuming a 1% monthly rate of return?

Present Value = 1000 ÷ (1 + 0.01)48

Present Value = 1000 ÷ 1.0148

Present Value = 1000 ÷ 1.612226

Present Value = 620.26

## FAQ

### What is the difference between future value (FV) and present value (PV)?

Future value is the value of money at a future date, and present value is the value at today’s date.

A common question for future value is “in 10 years, what will \$2,000 in today’s money invested at a rate of 4% be worth?.”

### What is the difference between net present value (NPV) and present value (PV)?

Net Present Value is the present value of more than one future sums of money. Present value is for only one future sum of money.

A net present value can combine multiple calculations to find the present value of future values (e.g. \$5,000 10 years from now), annuity streams (e.g. \$400/month for 48 months), and perpetuities (e.g. \$5 daily in perpetuity).