What this calculator does
A dollar today is worth more than a dollar next year, because today’s dollar can be invested. Discounting is how that intuition becomes arithmetic: dividing a future amount by growth over the intervening years gives its value in today’s terms. It is the foundation underneath bond pricing, project appraisal and any decision that trades money now against money later.
This calculator works both directions from a single amount. Enter a figure and it reports both what that amount is worth today if it arrives in the future, and what it becomes in the future if you have it today.
The formula
Growth over n periods multiplies by (1+r)ⁿ, so discounting divides by the same factor. The discount factor shown is simply 1/(1+r)ⁿ: the multiplier that converts any future amount at that horizon into today’s money.
| Term | Meaning |
|---|---|
| PV | Present value: the amount in today’s money. |
| FV | Future value: the amount at the end of the period. |
| r | The discount rate, or the rate of return you could otherwise earn. |
| n | The number of periods, usually years. |
The inputs explained
| Field | What to enter |
|---|---|
| Amount ($) | The amount to convert. The calculator reports both directions, so it does not matter which way you are thinking about it. |
| Discount / growth rate (%) | Your discount rate. For personal decisions this is often what the money could earn elsewhere; for business appraisal it is usually the cost of capital. |
| Periods (years) | How many periods away the money is. |
When to use it
Lump sum now versus payments later
Settlements, redundancy packages and lottery payouts often offer a choice. Discount the future stream at a rate you could realistically earn and compare it against the lump sum on offer.
Valuing a business or property cash flow
Any asset is worth the present value of what it will produce. Discounting each year’s expected cash flow and adding them is how that valuation is built: the NPV calculator does this across a series.
Deciding whether to pay early for a discount
A supplier offering 2% off for paying 30 days early is offering a return. Work out whether that return beats what your money earns elsewhere over the same period.
Understanding long-term promises
A guarantee of $100,000 in 30 years sounds substantial. At a 5% discount rate it is worth around $23,000 today: which is the number to compare against alternatives.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
What $100,000 in the future is worth today
A fixed future amount, discounted back at 5%, over increasing horizons.
| Years away | Worth today | Discount factor |
|---|---|---|
| 1 year | $95,238.10 | 0.9524 |
| 5 years | $78,352.62 | 0.7835 |
| 10 years | $61,391.33 | 0.6139 |
| 20 years | $37,688.95 | 0.3769 |
| 30 years | $23,137.74 | 0.2314 |
| 50 years | $8,720.37 | 0.0872 |
How the discount rate changes a 10-year horizon
The same amount, the same horizon, discounted at different rates.
| Discount rate | Worth today | Grows to instead | Discount factor |
|---|---|---|---|
| 1% | $90,528.70 | $110,462.21 | 0.9053 |
| 3% | $74,409.39 | $134,391.64 | 0.7441 |
| 5% | $61,391.33 | $162,889.46 | 0.6139 |
| 8% | $46,319.35 | $215,892.50 | 0.4632 |
| 10% | $38,554.33 | $259,374.25 | 0.3855 |
| 15% | $24,718.47 | $404,555.77 | 0.2472 |
Questions
What discount rate should I use?
For personal decisions, use what the money would realistically earn if you had it now. For business appraisal, the weighted average cost of capital is standard. Higher rates penalise distant cash flows more heavily, so the choice matters a great deal on long horizons.
Is the discount rate the same as inflation?
No, though it is related. Inflation erodes purchasing power; the discount rate captures the total opportunity cost, which typically exceeds inflation. If you discount at a real rate, use cash flows in today’s dollars; if at a nominal rate, use nominal cash flows.
How is this different from the NPV calculator?
This handles a single amount. The NPV calculator discounts a whole series of cash flows and nets them against an initial investment.
Why is the discount factor useful on its own?
Because it is a multiplier you can apply to any amount at that horizon. If the factor for 10 years at 6% is 0.558, then any sum 10 years out is worth 55.8% of its face value today.
For a whole series of cash flows, use the NPV and IRR calculator. To see the effect of price rises specifically, try the inflation calculator.