Present Value Calculator
What a future sum, or a stream of payments, is worth in today's money.
- The one-off ₹10.00L, discounted 10 years
- ₹4,63,193.49
- No recurring payment entered
- ₹0.00
- Every rupee you receive, undiscounted
- ₹10,00,000.00
- Worth today
- ₹4,63,193.49
Present value answers one question: how much would you need in hand today to be indifferent to receiving that money later? A rupee arriving in ten years is worth less than a rupee now, because the rupee you hold can be invested — so the discount rate you pick is the return you could realistically earn on an alternative of similar risk, not a market forecast. Two things follow. First, the rate matters more than it looks: at 8% a ten-year sum is worth 46 paise on the rupee, at 12% only 32 paise. Second, a payment at the start of a year is worth one full period of discounting more than the same payment at the end — which is why a rent or premium schedule that looks identical on paper is not. This is the same discounting used to size a lump-sum settlement, price an annuity, or judge whether an upfront discount beats a payment plan.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
This calculator discounts money you will receive later back into what it is worth today. Give it a one-off future amount, a yearly payment, or both, along with a discount rate and the number of years, and it reports the present value of the whole stream and how much of the nominal total the waiting costs you.
The defaults are a one-off ₹10,00,000 arriving in 10 years, no recurring payment, discounted at 8% p.a. At those numbers the sum is worth about ₹4,63,000 today — less than half its face value — which is the entire point of the exercise. A toggle moves the yearly payment from the end of each year to the start, which is worth one extra period of discounting.
The discount rate is the return you could realistically earn on an alternative of comparable risk, not a market forecast. It is the single most sensitive input here: at 8% a ten-year sum is worth about 46 paise on the rupee, at 12% only 32 paise. Two people can be looking at the same offer and value it very differently, and both be right, because they have different alternatives.
This is the arithmetic behind judging a lump-sum settlement against a pension, pricing an annuity, or deciding whether an upfront discount beats a payment plan. It assumes a single constant rate and payments that arrive exactly on schedule, which is a simplification — real streams carry default risk that a higher discount rate is meant to price in.
PV = FV / (1 + r)^n and PV of annuity = A x [1 - (1 + r)^-n] / rFV is the future amount, A the recurring payment, r the discount rate per period and n the number of periods. When the payment arrives at the start of each period rather than the end, the annuity result is multiplied by (1 + r) once more.
Frequently asked questions
What is present value and why is it lower than the future amount?
Present value is what a future sum is worth today, given that money in hand can be invested and grow. Because a rupee received now could earn a return before the future date arrives, a rupee promised later is worth less than a rupee held now. Discounting reverses compounding: where compounding multiplies by (1 + r) for each period forward, discounting divides by (1 + r) for each period back.
What discount rate should I use in a present value calculation?
The discount rate should be the return you could realistically earn on an alternative investment of comparable risk over the same period, sometimes called the opportunity cost of capital. For a government-backed cash flow, a sovereign yield is the honest comparison; for a risky private stream, a higher rate prices in the chance the money never arrives. There is no single correct rate, which is why the same offer can be worth different amounts to different people.
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the end of each period; an annuity due pays at the start. Because every payment in an annuity due arrives one full period earlier, it is discounted one period less, so its present value is higher by exactly a factor of (1 + r). Rent and insurance premiums are usually annuities due; a bond's coupon is an ordinary annuity.
How is present value different from an inflation calculation?
Both divide by a compounding factor, but they answer different questions. An inflation calculation restates a future amount in today's purchasing power, so the rate used is expected inflation. A present value calculation restates it in terms of what you would have to invest today to end up with that amount, so the rate used is the return available on an alternative investment. The two coincide only if your best available return happens to equal inflation.
Go further
The related question: what a future sum buys, rather than what it is worth.
The other direction — turn a corpus you already hold into a payment stream.
Discounting applied to a target: what to invest now for a cost later.
Why a number that grows can still lose ground.
Discounting is this run backwards.