Getanswers.app

Present Value Calculator

Calculate Present Value | PV Calculator | Net Present Value (NPV) Calculator

Present Value Calculation

The present value of an investment is the amount you would have to invest today at a certain interest rate to receive that amount in the future with a specific return.

Present Value Calculator is an app for calculating this value given the future value, interest rate and the period. In essence, present value calculator is compound interest calculator in reverse. Given the desired future value, the rate of return, and its present value, you can use this calculator to determine how much time you have to leave the money compounding (gaining interest).

The formula reads: PV = FV/(1 + r)^n

Also termed as PV Calculations, use cases include determining how much money you will need to invest today to receive a certain amount in the future. For example, if you want get $200 in future, at an 8% rate of interest, in 2 years, in present, you would have to invest $171.47 = $200/(1 + 0.08)^2.

Another use case could be value of an annuity calculation which is equal to the sum of the cash flows (payments) in time, discounted by their expected interest rate at the time of each payment.

The same calculations is also used in the theory of stock valuation Wiki