✦ Free Financial Tool

Time Value of Money Calculator

A dollar today is worth more than a dollar tomorrow. Convert between the present value and future value of money at any interest rate, time period and compounding frequency — in either direction.

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The Concept

What is the time value of money?

The time value of money is one of the most important ideas in finance: a sum of money is worth more today than the identical sum received in the future. The reason is simple — money you hold now can be invested and earn a return while you wait, so today's dollar can grow into more than one dollar by the time the future payment arrives. Put the other way round, a dollar promised years from now is worth less than a dollar in your hand today.

This calculator turns that principle into a figure. Choose a direction, enter an amount, a rate of return, a number of years and a compounding frequency, and it converts between value today and value later. It works both ways, which is what separates it from a one-direction tool like the future value of money calculator.

The Two Sides

Present value vs future value

Time value of money has two directions, and this calculator handles both:

  • Future value answers “what will this money grow into?” It takes an amount today and projects it forward. $10,000 today at 7 percent compounded monthly grows to about $40,387 in 20 years.
  • Present value answers “what is a future amount worth now?” It takes a future sum and discounts it back to today. A $10,000 payment due in 20 years is worth only about $2,476 today at the same rate.

They are mirror images of the same calculation. Future value multiplies by a growth factor; present value divides by it. Switching the dropdown at the top of the calculator flips between the two and relabels the inputs and results so the numbers always read correctly.

How To

How to use this calculator

Five inputs define the result:

  • What you want to find — future value (grow an amount today) or present value (discount a future amount).
  • Amount — the sum today for future value, or the future sum for present value.
  • Annual interest rate — the rate of return, also called the discount rate when working backwards.
  • Number of years — how far apart today and the future date are.
  • Compounding frequency — how often interest is applied: annually, quarterly, monthly or daily. Monthly is the default.

The result shows the converted value, the original amount, and the gap between them — interest earned when growing forward, or the discount when valuing backwards.

The Formula

The time value of money formulas

One relationship, written two ways. To grow an amount forward into its future value:

FV = PV × (1 + r/n)n×t

To discount a future amount back to its present value, divide instead of multiply:

PV = FV ÷ (1 + r/n)n×t

In both, PV is the value today, FV is the value in the future, r is the annual rate, n is the number of compounding periods per year, and t is the number of years. The two are exact inverses: discount a future value back and you land on the original present value. The future value formula guide breaks the growth side down variable by variable.

Example

Example: $10,000 in both directions

Growing $10,000 forward at 7 percent, compounded monthly, gives its future value at each horizon:

YearsFuture valueInterest earned
5 years$14,176$4,176
10 years$20,097$10,097
20 years$40,387$30,387
30 years$81,165$71,165

Now the reverse: what a future $10,000 payment is worth today, discounted at the same 7 percent. The further away the payment, the less it is worth now — the heart of the time value of money.

Received inPresent value todayDiscount
5 years$7,054$2,946
10 years$4,976$5,024
20 years$2,476$7,524
30 years$1,232$8,768
Why It Matters

Why the time value of money matters

Almost every money decision is really a time-value question. Should you take a $20,000 bonus now or $25,000 in three years? Is a pension lump sum better than the monthly payments? What is a future inheritance actually worth today? Present value lets you compare amounts that arrive at different times on a fair, like-for-like basis by pulling them all back to today's money.

One caveat: the figures here are nominal, and the rate represents your rate of return rather than inflation specifically. Inflation is a separate force that also erodes future purchasing power — to model it directly, use the inflation option on the compound interest calculator. To turn a future goal into a savings plan, the savings growth calculator and retirement calculator work from the same time-value math.

Assumptions

Assumptions behind the numbers

  • A constant rate. The same rate is applied every period. Real returns and discount rates change over time, so treat the result as a clean estimate.
  • A single sum. The calculator values one lump amount. For a stream of regular payments, use the future value calculator.
  • Nominal figures. Results are not separately adjusted for inflation or tax.
  • Monthly compounding by default. The default matches the rest of the site; you can switch to annual, quarterly or daily.
FAQ

Frequently Asked Questions

The time value of money is the principle that a sum of money is worth more today than the same sum in the future, because money you hold now can be invested and earn a return while you wait. This calculator puts a number on it, converting between an amount today (its present value) and its worth later (its future value) at any rate and time period.
Future value is what an amount today grows into after earning interest — $10,000 today at 7 percent compounded monthly becomes about $40,387 in 20 years. Present value works backwards: what a future amount is worth in today's money. A $10,000 payment due in 20 years is worth only about $2,476 today at the same rate.
Two formulas cover it. Future value is FV = PV × (1 + r/n) to the power of n × t. Present value rearranges that to PV = FV ÷ (1 + r/n) to the power of n × t. PV is the amount today, FV the future amount, r the annual rate, n the compounding periods per year, and t the number of years. The calculator applies whichever direction you choose.
The discount rate is the return you could otherwise earn on the money, so it depends on context. Many people use a long-run stock-market estimate of around 7 percent, a safer 3 to 5 percent for lower-risk money, or their own expected rate of return. A higher rate discounts future amounts more heavily, making them worth less today.
Not directly. The figures here are nominal. Inflation is one reason future dollars are worth less, but the rate in this tool represents your rate of return rather than inflation specifically. To adjust explicitly for inflation, use the inflation option on the compound interest calculator.
Use present value to compare money available at different times — for example, deciding whether a lump sum offered today beats a larger amount promised in several years, or valuing a future payment in today's terms. Use future value to project what a sum of money or an investment will grow into.
Learn

The concepts behind the numbers — read the full library in the Learn hub.

Guide · Investing

Future Value Formula Explained

Every variable in the growth equation, plus how to rearrange it to solve for rate or time.

 Guide · Investing

How to Calculate Future Value

A step-by-step walkthrough of the future value side of the time value of money, with examples.

 Guide · Investing

How Does Compound Interest Work?

The engine behind both present and future value, explained with worked examples.

 Scenario · Investing

What Is $10,000 in 10 Years Worth Today?

Present value of a future $10,000 at 5%, 7% and 10%.

 Guide · Investing

Present Value vs Future Value

Future value projects what money today grows to; present value discounts a future amount back to today.

 Guide · Investing

Time Value of Money in Excel

Calculate the time value of money in Excel or Google Sheets with the FV, PV, NPER, RATE and PMT functions — syntax, the sign…

 Guide · Investing

Time Value of Money in Google Sheets

Build a time value of money calculator in Google Sheets with FV, PV, NPER, RATE and PMT.

 Guide · Investing

The Future Value of Money Formula

The future value of money formula is FV = PV × (1 + r)^n.
Keep Exploring

Keep exploring — every tool below is free and works the same way.

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Future Value Calculator

Value a lump sum plus recurring monthly payments at a given interest rate.

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Compound Interest Calculator

See how money grows with compound interest, contributions, tax and inflation.

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Investment Growth Calculator

Project a portfolio's future value with regular contributions and compounding returns.

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Rule of 72 Calculator

Estimate how many years it takes your money to double at a given rate.

 Retirement

Retirement Calculator

Estimate the nest egg you could have at retirement from contributions and returns.
Disclaimer

Important disclaimer

This page is provided for informational and educational purposes only. It does not constitute financial, investment, tax, legal, or accounting advice, and should not be treated as a substitute for advice from a licensed professional.

Any figures, examples, or calculator results shown are estimates based on stated assumptions — not guarantees. Actual returns, rates, and outcomes will vary. Read our full disclaimer before acting on any results.