The Present Discounted Value calculator returns the value based on the future value, rate of return per period and number of periods.
INSTRUCTIONS: Choose units and enter the following:
Present Discounted Value (PV): The calculator returns the value in U.S. dollars. However, this can be automatically converted to compatible units via the pull-down menu.
Present Value (PV) , also known as " present discounted value " is an equation used in Finance and Economics to calculate the present day value of an amount that is received at a future date. It is based on the premise of "time value of money" i.e a figure of an amount of money today is of more worth than the same figure in the future.
The formula for Present Discounted Value is:
PV = FV / (1+r)n
where:
EXAMPLE:
If a worker is to receive $ 2000 in 4 year, and the effective annual interest rate during this period is 11%, then the present value of this amount is $ 1462.38
The Present Value formula has a broad range of uses and may be applied to various areas of finance including corporate finance, banking finance, and investment finance. Apart from the various areas of finance that present value analysis is used, the formula is also used as a component of other financial formulas.