Finance 2026-05-03 4 min read By Konvertibly Team

Present Value Calculator: What Is Future Money Worth Today?

Understand present value, the discount rate, and how to use PV to compare investment options, value cash flows, and make smarter financial decisions.

Present Value: The Time Value of Money

A pound today is worth more than a pound in the future. This is the core principle of present value (PV) — also called discounting. Money available now can be invested to earn a return; future money is uncertain; and inflation erodes purchasing power. PV translates future amounts into today's equivalent value.

Present Value Formula

PV = FV ÷ (1 + r)ⁿ

FV = future value
r = discount rate (per period)
n = number of periods

Examples

Receive £10,000 in 5 years, discount rate 6%: PV = 10,000 ÷ 1.06⁵ = £7,473
Receive £50,000 in 10 years, discount rate 8%: PV = 50,000 ÷ 1.08¹⁰ = £23,160

Choosing the Discount Rate

Personal decisions: Your expected investment return (e.g. 6–8%)
Business decisions: Weighted Average Cost of Capital (WACC)
Risk adjustment: Higher discount rates for riskier future cash flows
Inflation only: Use CPI rate to convert to real values

Net Present Value (NPV)

NPV = sum of all discounted future cash flows minus the initial investment. NPV > 0 means the investment creates value at your chosen discount rate. It is the gold standard for capital investment decisions.

Calculate present value: Free Present Value Calculator