Present Value and Future Value Calculator
A rupee today is worth more than a rupee a year from now, because today's rupee can earn a return. This idea is called the time value of money. Use this calculator to find the future value of a sum you hold today, or the present value of a sum you will receive later.
Last reviewed:
- Future value
- ₹1,48,595
- Amount today
- ₹1,00,000
- Growth
- ₹48,595
- The rate is assumed constant. Taxes and charges are not deducted.
It supports yearly, half-yearly, quarterly and monthly compounding.
How to use this calculator
- Choose whether you want the future value or the present value.
- Enter the amount, the yearly rate and the number of years.
- Pick how often the rate compounds.
- Read the result and the difference.
Formula and variables
Future value = PV × (1 + r ÷ m)^(m × t) Present value = FV ÷ (1 + r ÷ m)^(m × t)
- r - annual rate as a decimal.
- m - compounding periods in a year (1, 2, 4 or 12).
- t - number of years.
Worked example
₹1,00,000 at 8% a year, compounded quarterly, for 5 years.
| Amount | ₹1,00,000 |
|---|---|
| Rate, period, compounding | 8%, 5 years, quarterly |
| Future value of ₹1,00,000 today | ₹1,48,595 |
| Present value of ₹1,00,000 received in 5 years | ₹67,297 |
- Quarterly rate = 8% ÷ 4 = 2% over 20 quarters, giving 1.02²⁰ = 1.4859.
- Future value = 1,00,000 × 1.4859 = ₹1,48,595.
- Present value = 1,00,000 ÷ 1.4859 = ₹67,297.
What changes the result
- Rate. A higher rate increases future value and lowers present value.
- Time. The longer the period, the larger the gap between present and future values.
- Compounding. More frequent compounding gives a slightly higher future value.
Benefits and practical uses
- Compare money at different points in time.
- Judge whether a future payment is worth taking now.
- Plan savings goals.
Assumptions and limitations
- A constant rate for the whole period.
- A single amount, with no regular deposits or withdrawals.
- No tax or charges.
Frequently asked questions
What is present value?
The value today of an amount you will receive in the future, discounted at a chosen rate.
What is future value?
What an amount today will grow to after earning a given rate for a period.
What discount rate should I use?
Use the return you could reasonably earn on the money elsewhere, such as a fixed deposit rate or a cautious investment return.
How is this different from compound interest?
It is the same maths. This tool also works backwards from a future amount to today's value.
Does compounding frequency matter?
Slightly. More frequent compounding gives a slightly higher result at the same annual rate.
References
Page last reviewed on . This calculator gives estimates for planning only; it is not financial advice and not an offer from any lender.