The cornerstone of all finance: money today is worth more than the same money tomorrow. Learn to convert future values into today's dollars.
PVDiscountingTime Value
Live Result
4,631.93
ฦ: FV / (1 + r)^nraw: 4631.93
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ฦ(x)
Use variable names from the panel above (e.g. FV, r, n) โ or type numbers directly: 10000 / (1 + 0.08)^10
FV
Future Value โ amount received at a future date
FV = 10000
r% as decimal
Discount rate per period (decimal)
r = 0.08
n
Number of periods (years)
n = 10
๐ก You can also enter values directly in the formula: 10000 / (1 + 0.08)^10
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โฌ Export Calculation
Exports a plain .txt file with your expression, formula, all variable values, result, and educational notes โ ready to paste into any report, Word doc, Notion, or Google Docs.
The exported file includes the formula in standard mathematical notation โ you can paste it directly into Excel, Google Sheets, or back into FinanceSheep.
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Learn: What Is a Future Cash Flow Worth Today?
Time Value of Money ยท Educational Guide
The Core Idea
Would you rather receive $1,000 today or $1,000 in 10 years? Obviously today โ you could invest that $1,000 and have much more in 10 years. This is the time value of money: the foundation of everything in finance.
How It Works
Present Value answers: what is this future amount worth RIGHT NOW? We "discount" future cash by dividing by (1+r)^n. Every extra year in the future, and every extra percent of risk, reduces today's value.
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Real-World Example: $10,000 promised in 10 years, discount rate 8%: PV = 10,000 / (1.08)^10 = 10,000 / 2.159 = $4,632. You should pay no more than $4,632 today for that promise.