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Present Value (PV) Calculator

Calculate the current value of future cash flows or annuities with precision. Supports multiple compounding periods, negative interest rates, and inflation adjustments.

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Present Value
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Future Value (Total)
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About

In finance, a dollar today is worth more than a dollar tomorrow due to its potential earning capacity. This Present Value (PV) Calculator helps investors and financial analysts determine the current worth of a future sum of money or stream of cash flows given a specific rate of return. This concept is the cornerstone of the Discounted Cash Flow (DCF) analysis used in valuing companies, bonds, and capital projects.

Accuracy in this calculation is vital. A small deviation in the discount rate or compounding frequency can significantly skew valuation results, leading to poor investment decisions. Whether you are evaluating a lump sum inheritance, a structured settlement, or a corporate bond with semi-annual coupons, this tool handles complex scenarios including "Annuity Due" (payments at the beginning of the period) and negative interest rates often found in central banking policies.

finance discounted cash flow investment valuation annuity

Formulas

The general formula for the Present Value of a single future sum is:

PV = FV(1 + r)n

For an Ordinary Annuity (payments PMT at end of period):

PVord = PMT × 1 − (1 + r)−nr

For Continuous Compounding:

PV = FV ⋅ e−rt

Reference Data

FrequencyCompounding Periods (n per year)Effect on PV
Annually1Standard baseline
Semi-Annually2Common for bonds
Quarterly4Common for dividends
Monthly12Mortgages/Loans
Daily365High precision savings
Continuous∞Theoretical limit (exp)
Simple InterestN/ANo compounding effects

Frequently Asked Questions

An Ordinary Annuity assumes payments occur at the end of each period (like a mortgage). An Annuity Due assumes payments occur at the beginning of each period (like rent). Annuity Due always results in a higher Present Value because the cash is received sooner.
Yes. While rare in retail banking, negative interest rates occur in certain economic conditions (e.g., government bonds in Europe/Japan). A negative rate implies that money tomorrow is worth more than money today, reversing the standard discounting logic.
More frequent compounding increases the Future Value of a current sum, or conversely, decreases the Present Value required to reach a future goal. Daily compounding creates a larger effect than annual compounding due to interest earning interest more often.