# Present Value Calculator Discount a future lump sum or an annuity back to today's value (PV). Supports lump-sum and annuity cash flows, multiple compounding frequencies, a present-value decay curve, and a per-period breakdown. PV = FV / (1+r)^n for a lump sum. > Canonical page: https://elysiatools.com/en/tools/present-value-calculator - **Category:** Finance - **Keywords:** present value, pv, discount, time value of money, annuity, lump sum, finance, net present value ## Overview The Present Value Calculator helps you determine the current worth of a future sum of money or a series of recurring payments (annuity) based on a specific discount rate and compounding frequency. By discounting future cash flows back to today's value, this tool provides a clear breakdown of the time value of money, complete with a period-by-period decay curve. ## Inputs - **Cash Flow Type** (select) - **Future Value** (number): e.g. 10000 - **Recurring Payment** (number): e.g. 1000 (for annuity) - **Discount Rate (%)** (number): e.g. 5 - **Number of Periods** (number): e.g. 10 - **Compounding Frequency** (select) - **Decimal Places** (number) ## When to use - Evaluating the current value of a future inheritance, payout, or lump-sum investment return. - Comparing different annuity payment options, such as monthly pension payouts versus a lump-sum settlement. - Assessing the present value of business cash flows or lease payments discounted at a specific cost of capital. ## How it works - Select the cash flow type, choosing either a single future lump sum or a recurring annuity payment. - Enter the future value or recurring payment amount, the annual discount rate, and the total number of periods. - Choose the compounding frequency (such as annually, quarterly, or monthly) and set your preferred decimal precision. - Submit the values to calculate the total present value, view the period-by-period breakdown, and inspect the present-value decay curve. ## Use cases - Determining the current value of a $50,000 business payout due in 5 years at a 6% discount rate. - Comparing a $1,200 monthly annuity over 10 years against an immediate lump-sum settlement offer. - Calculating the present value of quarterly lease payments to evaluate long-term contract liabilities. ## Frequently asked questions ### What is the difference between a lump sum and an annuity? A lump sum is a single payment received at a specific future date, while an annuity consists of a series of equal payments made at regular intervals over multiple periods. ### How does compounding frequency affect the present value? More frequent compounding (e.g., monthly instead of annually) increases the compounding effect on interest, which decreases the present value of a future sum when discounted. ### What formula is used for the lump-sum present value calculation? It uses the formula PV = FV / (1 + r/m)^(n*m), where FV is future value, r is the annual discount rate, m is the compounding frequency per period, and n is the number of periods. ### Can I calculate the present value of daily compounded cash flows? Yes, you can select 'Daily' (365 compounding periods per year) in the compounding frequency option. ### What does the present-value decay curve represent? 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