Quick Summary
Present Value calculator: The Present Value (PV) calculator helps determine the current worth of a future sum of money, discounted at a specific interest rate. It answers the key question “How much is future money worth today?” This concept reflects the time value of money, recognising that due to inflation, opportunity cost, and risk, a rupee received in the future holds less value than one received today.
A present value (PV) calculator is a powerful financial tool that helps you determine the current worth of a sum of money that you expect to receive or pay in the future. By considering the time value of money, the present value concept emphasises that a dollar today is worth more than a dollar in the future due to its potential earning capacity. Present calculator value is also useful when you need to estimate how much to invest now in order to meet a certain future goal, for example, when buying a car or a home. So, if you’re wondering how much your future earnings are worth today, keep reading to find out how to use the Present Value Calculator.
The tool assists in retirement planning by estimating how much you need to save today to reach your goals, and it aids in project valuation by calculating the present value of expected cash inflows.
The formula for calculating present value (PV) is:
PV = C / (1+r)^n
Where:
PV = Present Value
C = Cash Flow for a period
n = number of periods
r = rate of return
Let us suppose that you need Rs 1,00,000 precisely five years from today. You expect to earn 8% from an investment. The number of periods would be five.
Or imagine you want to save ₹10,00,000 for your child’s college education 10 years from now. Using a Present Value Calculator with an expected annual return of 7%, you can determine how much you need to invest today.
Calculation:
Present Value (PV) = ₹10,00,000 / (1 + 0.07)^10 = ₹5,08,349
So, you’d need to invest approximately ₹5.08 lakhs today to reach your goal. This shows how powerful and practical the PV Calculator can be for long-term financial planning.
The Present Value Calculator India shows the present value of a fixed sum in the future. To use the PV Calculator:
A Present Value calculator can help you in several ways:
The Net Present Value (NPV) calculator is a powerful tool that helps you assess the true value of future cash flows. Applying the time value of money enables smarter investment evaluation, loan comparison, and retirement planning.
With accurate insights into how much to invest today for future goals, this tool simplifies financial planning and boosts decision-making confidence. Start using the NPV calculator today to make informed choices and build a financially secure future.
The present value formula is PV = FV/(1 + i) n, where PV = present value, FV = future value, i = decimalised interest rate, and n = number of periods.
PV = FV / (1 + r / n)nt
r = Rate of interest (percentage ÷ 100) n = Number of times the amount is compounding. t = Time in years.
Applying the formula, the present value of 1,000,000 in 20 years, given a 10% discount rate, is: 1,000,000 ( 1 + 10 % ) 20 = 148 643.628.
Subtract the CPI of the start date from the CPI of the end date. Divide that number by the CPI of the start date. Multiply this number by 100 and add a % sign, and there’s the inflation rate for that period.
Assuming an average of 6% inflation rate in India, the value of ₹1 crore could diminish to ₹55.84 lakh after 10 years. After 20 years, the value of ₹1 crore could shrink to around ₹31.18 lakh, factoring in 6% inflation. After 30 years, ₹1 crore will be worth approximately ₹17.41 lakh in today’s terms.
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Authored by, Divya Jain
Content Curator
Divya merges a love for storytelling with instructional design to create content that both educates and inspires. She has written for e-learning platforms, exam prep sites, and student communities, always placing creativity at the core of her work.
Chegg India does not ask for money to offer any opportunity with the company. We request you to be vigilant before sharing your personal and financial information with any third party. Beware of fraudulent activities claiming affiliation with our company and promising monetary rewards or benefits. Chegg India shall not be responsible for any losses resulting from such activities.
Chegg India does not ask for money to offer any opportunity with the company. We request you to be vigilant before sharing your personal and financial information with any third party. Beware of fraudulent activities claiming affiliation with our company and promising monetary rewards or benefits. Chegg India shall not be responsible for any losses resulting from such activities.
