| Favorites |
| |||
 | |||
| Present Value Formula: Present Value = Future Value * (1 + Interest Rate Per Period)^-Number of Periods | |||
Present Value Definition The Present Value Calculator will instantly calculate the present value of any future lump sum if you enter in the future value, the interest rate per period (also called the discount rate), and the number of periods. The present value calculation is a time value of money calculation that takes into account what many economists call the “Time Preference“. Time Preference is simply that everything else being equal a rational individual would rather have X amount of money today rather than X amount of money at some point in the future. Inflation and its effect on decreasing the purchasing power of money over time are key considerations underlying any present value calculation. Also, check out the Present Value Annuity Calculator. How to Calculate Present Value Let's be honest - sometimes the best present value calculator is the one that is easy to use and doesn't require us to even know what the present value formula is in the first place! But if you want to know the exact formula for calculating present value then please check out the "Formula" box above. |