# Present Value Calculator

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Instructions:
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Use this Present Value Calculator to compute the present value (\(PV\)) by indicating the future value (\(FV\)), the interest rate (\(r\)), number of years (\(n\)) the money will be invested, and the type of compounding (yearly, bi-yearly, quarterly, monthly, weekly, daily or continuously):

## Present Value Calculator

More about the
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this present value calculator
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so you can better understand how to use this solver: The present value (\(PV\)) of a certain amount of money that will have certain future value (\(FV\)) after a number of years, depends on the number of years \(n\) when the money will be received, the interest rate \(r\), the type of compounding (yearly, bi-yearly, quarterly, monthly, weekly, daily or continuously). Let \(k\) be the number of times the money is compounded in a year. For example, for yearly compounding we have \(k = 1\), for bi-yearly compounding we have \(k = 2\), for quarterly compounding we have \(k = 4\), etc.

### How do you calculate present value?

The present value (\(PV\)) can be computed using the following formula:

\[ PV = \frac{FV}{\left( 1+\frac{r}{k}\right)^{ k \times n} } \]For continuous compounding, we get that \(k \to \infty\), in which case we need to use the following compounded formula instead.

\[ PV = \frac{FV}{e^{r \times n}} \]What this present value calculator does is simply find a compounding factor, which is used to bring future money into present money. The same task can be conducted with Excel, using the PV() function, with the difference that this calculator shows all the steps.

### Present value calculator with payments

Notice that this calculator does not include the possibility of payments. If there are periodic payments, then you should use an annuity calculator , and the more general case of computing the net present value of a sequence of flows, you can use this net present value calculator .

If instead you know the present value and you want to compute the future value, use this calculator .

### How do you calculate net present value, is it related to the present value?

The concepts of present value and net present value are tightly related. Present value of a cash flow is the value in today's money of a future cash flow. On the other hand, the net present value calculation consists of the calculation and sum of present values of ALL future cash flows associated to a project.