Would you rather have $10,000 today or $12,000 in five years? If you can earn 5% annually, today's $10,000 grows to about $12,763 — so take the cash now. That comparison is present value: the current worth of a future sum, discounted at a rate reflecting what your money could otherwise earn. The formula is PV = FV ÷ (1 + r)^n — the future value divided by the compounding factor for rate r over n periods. A lottery winner choosing between $1 million today and $50,000 a year for 30 years is really choosing between present values.

Investors price bonds this way, courts compute lump-sum settlements, and homebuyers sense it when comparing mortgage points. Higher discount rates shrink present value (future money matters less when alternatives pay well), and longer waits shrink it too. This calculator performs the final multiplication: compute the discount factor 1 ÷ (1 + r)^n on paper — for $12,000 at 5% over 5 years, 1 ÷ 1.05⁵ ≈ 0.7835 — type the future value in the Variable A box (12000), and type the discount factor in the Variable B box (0.7835). The Result box shows about $9,402: what that future $12,000 is worth in today's dollars.

With the pre-filled defaults — Variable A 10, Variable B 5 — the Present Value Calculator returns Result 50.0000. Change any input and those results update instantly, so you can see exactly how each number you enter moves the answer.