Present Value Calculator
Present value answers a simple question: how much would I need today to have a given amount later? Enter the future amount, the time and a discount rate.
Results
Present value
₹5,08,349.29
- Discount
- ₹4,91,650.71
- Discount factor
- 0.50835
₹10,00,000.00 received in 10 years is worth ₹5,08,349.29 today at a 7% discount rate.
Show the calculation steps
- Rate per period r = 7% ÷ 1 = 7%; periods n = 10.
- PV = FV ÷ (1 + r)^n = ₹10,00,000.00 ÷ 1.96715 = ₹5,08,349.29.
- The discount is FV − PV = ₹4,91,650.71.
- Choose a discount rate that reflects the return you could earn elsewhere, or the inflation rate to find today's purchasing power.
Why money today is worth more
Money you have today can be invested and grow, and inflation erodes what money buys later. Discounting reverses growth, giving the future amount's value in today's terms.
Common uses
Present value is used to compare payments made at different times, value a lump sum payout against instalments, price bonds and appraise investments. Using inflation as the discount rate gives future money in today's purchasing power.
Formula
PV = FV ÷ (1 + r)^n
Where:
- PV
- = Present value
- FV
- = Future value
- r
- = Discount rate per period
- n
- = Number of periods
Example calculation
₹10,00,000 in 10 years at a 7% discount rate
Inputs
- Future Value
- ₹10,00,000
- Discount Rate
- 7 %
- Time Until Received
- 10 years
- Compounding
- Annually
Result
- Present value
- ₹5,08,349.29
- Discount
- ₹4,91,650.71
- Discount factor
- 0.50835
Step-by-step
- Rate per period r = 7% ÷ 1 = 7%; periods n = 10.
- PV = FV ÷ (1 + r)^n = ₹10,00,000.00 ÷ 1.96715 = ₹5,08,349.29.
- The discount is FV − PV = ₹4,91,650.71.
Important notes
- Results are estimates based on the values you enter. They assume the rates stay constant and exclude taxes and fees unless stated.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
What is present value?
The value today of a sum you will receive in the future, after discounting for time and interest.
Which discount rate should I use?
The return you could earn on a comparable investment, or inflation if you want purchasing power.
What is the discount factor?
The number you multiply the future value by to get the present value: 1 ÷ (1 + r)^n.
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