Calculate the present value of future cash flows.
PV = FV / (1 + r)^n, where FV is a future amount, r is the discount rate, and n is the number of periods.
$10,000 received in 10 years at a 5% discount rate is worth about $6,139 today.
It discounts a future cash flow to today's dollars so you can compare investments or evaluate lump-sum versus future-payment options.
Use an opportunity cost or required return, often a risk-free rate plus a risk premium. Higher rates reduce present value.
No. This tool discounts a single future amount. For a stream of payments, use a net present value or annuity calculation.
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