Present Value of Future Money Calculator

What is Present Value?

Present value is the current worth of a future sum of money at a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.

Essentially, present value tells you if a sum of money today is worth more than the same amount in the future due to:

  • Opportunity to earn interest
  • Effects of inflation reducing purchasing power over time

The Formula

PV = FV / (1 + r)^n

Where:

  • PV = Present Value
  • FV = Future Value (the amount you'll receive in the future)
  • r = Interest rate (in decimal form)
  • n = Number of years

Total Interest Value

The total interest value is the difference between the future value and the present value:

Interest Value = FV - PV

This represents how much your money will grow over the given time period at the specified interest rate.

Example

If you need ₹1,00,000 in 5 years and expect an annual return of 8%:

FV = ₹1,00,000

n = 5 years

r = 8% (or 0.08 in decimal)

PV = 100,000 / (1 + 0.08)^5 = ₹68,058

Interest Value = ₹100,000 - ₹68,058 = ₹31,942

This means you would need to invest ₹68,058 today to have ₹1,00,000 in 5 years, with a total interest gain of ₹31,942.