This present value calculator can be used to calculate the present value of a certain amount of money in the future or periodical annuity payments.
Present Value of Future Money
Present Value of Periodical Deposits
PV is defined as the value in the present of a sum of money, in contrast to a different value it will have in the future due to it being invested and compound at a certain rate.
Net Present Value
A popular concept in finance is the idea of net present value, more commonly known as NPV. It is important to make the distinction between PV and NPV; while the former is usually associated with learning broad financial concepts and financial calculators, the later generally has more practical uses in everyday life. NPV is a common metric used in financial analysis and accounting; examples include the calculation of capital expenditure or depreciation. The difference between the two is that while PV represents the present value of a sum of money or cash flow, NPV represents the net of all cash inflows and all cash outflows, similar to how the net income of a business after revenue and expenses, or how net benefit is found after evaluating the pros and cons to doing something. The inclusion of the word ‘net’ denotes the combination of positive and negative values for a figure.
The Time Value of Money
PV (along with FV, I/Y, N, and PMT) is an important element in the time value of money, which forms the backbone of finance. There can be no such things as mortgages, auto loans, or credit cards without PV.
To learn more about or do calculations on future value instead, feel free to pop on over to our Future Value Calculator. For a brief, educational introduction to finance and the time value of money, please visit our Finance Calculator.