Present Value / Future Value
Calculates single sum PV/FV over multiple periods.
Inputs
The Ultimate Guide to Present and Future Value
Welcome to the EasyToolz Present & Future Value Calculator. This is the most fundamental concept in all of finance, known as the Time Value of Money (TVM).
What is the Time Value of Money?
The core principle of TVM is that a dollar today is worth more than a dollar tomorrow. Why? Because you can invest the dollar you have today and earn interest on it. Therefore, if someone offers to pay you $1,000 today or $1,000 in five years, you must always take the money today.
How to Use This Calculator
Our tool allows you to translate money across time:
- Calculate Future Value (FV): Input a Present Value (e.g., $5,000), an interest rate, and a time period. The tool will tell you what that money will grow into.
- Calculate Present Value (PV): Input a Future Value (e.g., $100,000 needed for retirement in 20 years) and a discount rate. The tool will tell you exactly how much you need to invest today in a lump sum to reach that goal.
The Mathematical Formulas
If you prefer algebra, here are the standard TVM formulas:
- Future Value: PV × (1 + r)^n
- Present Value: FV / (1 + r)^n
- Where 'r' is the interest rate and 'n' is the number of periods.
Frequently Asked Questions
What is a discount rate?
A discount rate is just an interest rate running in reverse. Instead of adding interest to grow money into the future, you subtract (discount) interest to bring future money back to the present day.