Present Value Calculator
If you know the ROR ( Rate of Return) and want to determine the current state of the projected investments or the cash flow streams, you can use the present value calculator.
Present value, also known as a present discounted value, is a basic financial theory used to estimate the current values of things like loans, mortgages, stocks, bonds, etc. In other words, Present value (PV) is the actual/current rate of the projected investments or cash flow streams, given a specified return rate.
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Formula of Present Value Calculator
To calculate the present value instantly, you can use our calculator or calculate it manually, you can use the formula listed below:
PV = FV / (1+r)
PV = Present value
FV = Future Value
r = Interest rate
By using the above formula, you will find the present value income of one year. To estimate the present value for more than one year, you can use the formula listed below:
PV = FV / (1+r)n
n = number of periods
To calculate the absolute value, you can use our Absolute Value Calculator.
For a more precise understanding, let us have an example below:
Suppose a boy took a loan of $100 for two years, whereas the interest rate of the taken loan is 8%, determine the present value of the taken loan.
Future value = fv = 100$
Interest rate = r = 8%
Number of period = n = 2
Present value = PV = ?
As in the above data, the number of periods is greater than one, so we will use the formula listed below:
PV = FV / (1+r)n
Putting values in the formula:
PV = 100$ / (1+0.08)2
PV = 85, 73$
How to use the Present Value Calculator?
The steps to use the present value calculator are as follows:
Step 1: Enter the future value in the first required input.
Step 2: Enter the Interest rate in the second required input.
Step 3: Enter the number of a period in the third required input.
Step 4: The calculator will automatically display an answer on the screen.
To determine the current state of the projected investments or the cash flow streams, you can use our present value calculator.