What is present value?

Present Value, or PV, is the value today of a sum of money you expect to receive in the future, after you discount it at a compound rate. A dollar (or rupee, euro, etc.) in hand now is not the same as the same nominal amount years from now, because money today can be invested and earn a return.

Discounting answers: “How much would I need to invest now at this rate to end up with that future amount?” The higher the discount rate or the longer the wait, the lower the present value of a fixed future amount.

Try the numbers on the home page calculator, then compare with our formulas page to see the same idea in symbols.