# Present Value Calculator

Present value is the current value of a future amount.

## Present value in detail

In simple terms, if you are getting a certain amount in the future, the present value helps you calculate the value of the amount as of today.

Present value has several applications in day-to-day life. You want to plan for your kid's college education after 10 years, and the fees is going to be £30,000. Using present value, you can calculate whether your present savings are enough to fund this expense after 10 years. Taking an annual interest rate of 4%, the present value of £30,000 after 10 years is £20,266.93. If you have savings of £20,266.93, you need not worry. If not, you can plan your savings in such a way that you have £30,000 at the end of 10 years.

### Calculation of present value

In order to calculate present value, you need to have the following information:

Future value: This is the amount you will receive or require in the future. In the example above, the future value is £30,000. You cannot calculate the present value until you know the future value.

**Number of payments:** This refers to the term of payments, which can be in years or months. In the above example, the number of payments is 10 (years).

Iinterest rate: Using the interest rate, you can calculate how much is the present value of an amount at a future date.

**Payment frequency:** The frequency of payments can be monthly, quarterly, 6 monthly, and yearly.

**Payment amount:** Payment amount is the amounts that need to be made to reach a particular future value. Continuing with example 1, if you don't have the necessary amount of savings, the payment amount will help you in determining how much you need to pay each month or each year to reach the amount of £30,000.

### Applications of present value:

The concept of present value is also useful in calculating bond yields and pensions. It is also useful in comparing different investments. If an investor has a choice between two investments, present value can be of great help.

**Example 1:** Investment A is giving £15,000 in one year, and investment B is giving £1,250 per month for 12 months. Interest rate is 7% for both these investments. While it may seem like both investments are giving £15,000 in one year, the use of present value will help you determine which one is more profitable.

The investment, which gives £15,000 in 1 year has a present value of £14,018.69. And the investment that gives £1,250 every month for 12 months has a present value of £14,446.40. So you can see the second investment has a higher present value and therefore if you have a choice, you should choose the second investment.

## Conclusion

Present value is a very important concept in finance and can be very useful in choosing among various investment options.

Our Present Value Calculator can be useful for calculating the present value under different scenarios.

## Popular Finance Calculators

People who read 'Present Value Calculator | Finance Calculators by iCalculator' also viewed the following finance guides and finance calculators:

### Finance and Tax Calculators

- Debt Payoff Calculator
- Credit Card Calculator: Fixed V's Minimum Payment
- Credit Card Repayment Calculator
- Payday Loan Calculator
- Loan Calculator
- Early Repayment Loan Calculator
- Car Loan Calculator
- PCP Car Loan Calculator
- Logbook Loan Calculator
- Personal Loan Calculator

- How much can I borrow?
- Mortgage Calculator
- Early Repayment Calculator
- Mortgage Comparison Calculator
- Mortgage Discount Points Calculator
- Stamp Duty Tax Calculator
- Rental Property Calculator
*Balloon*Mortgage Calculator*Buy to Let*Mortgage Calculator*Buy to Let*Mortgage Investment Profit Calculator

- Household Electrical Consumption Calculator
- Savings and Debt Comparison Calculator
- Household Budget Calculator
- Present Value Calculator
- Future Value Calculator
- Payments / Repayments Calculator

- Rule of 72 Calculator
- Savings Calculator (Goal Amount)
- US Treasury Bill Calculator [ T-Bill Calculator ]
- Invoice Calculator
- CAGR Calculator
- Perpetuity Calculator
- Effective Annual Rate Calculator
- Margin Calculator
- Current Ratio Calculator

- Dividends Calculator 2018/19
- Corporation Tax Calculator 2018/19
- Capital Gains Tax Calculator 2018/19
- UK Salary Calculators (PAYE Calculators)
- Landlord Income Tax (UK Only)
- US Salary Calculators (Federal Tax Calculators)
- AU Salary Calculators (Income Tax Calculators)
- JM Salary Calculators (Income Tax Calculators)
- CA Salary Calculators (Federal & Province)
- UK Employer NIC Calculator 2018 / 2019 tax year

- IR35 Status Calculator: In or Out?
- IR35 Calculators
- PAYE Calculator: Outside IR35, VAT Registered
- PAYE Calculator: Outside IR35, Non VAT Registered
- PAYE Calculator: Inside IR35, VAT Registered
- PAYE Calculator: Inside IR35, Non VAT Registered
- Employer NICS Calculator
- VAT Calculator
- Contractor Business Loan Calculator
- Profit Calculator

- Small Business Rate Relief Calculator
- VAT Calculator
- Stamp Duty Tax Calculator
- UK Salary Calculator
- United States Salary Calculator
- Canada Salary Calculator
- India Salary Calculator
- Australia Salary Calculator
- Jamaica Salary Calculator
- Singapore Salary Calculator

- Exchange Rate Calculator
- Forex Margin Calculator
- Retirement Calculator - Traditional IRA calculator
- Retirement Calculator - ROTH IRA calculator
- Retirement Comparison Calculator - ROTH and IRA
- Depreciation Comparison Calculator
- Annuity Depreciation Calculator
- Straight Line Depreciation Calculator
- Percentage (Declining Balance) Depreciation Calculator

- Forex Exchange Rate
- Forex Currency Pair
- Forex Leverage
- Forex Market
- Forex Trading
- Forex Margin Call
- Forex Margin Ratio
- Forex Margin Used
- Forex Maintenance Margin
- Forex: Price Interest Points (PIPs)

### Self Assessment 2018

Don't leave your 2018/19 Self Assessment to the last minute this year, update your information on the go and save time and stress, you will probably save yourself a few pounds too. Grab a free trial now and make tax less taxing.