In Short
Future value grows money forward with compound interest; present value discounts a future amount back to today [1][2]. $10,000 at 6% compounded monthly is worth $18,194 in 10 years. $50,000 needed in 10 years is worth $30,696 today at 5% a year. Saving $500 a month at 6% for 10 years grows to $81,940, or $82,349 if each payment is made at the start of the month.
How to Use the Present & Future Value Calculator
- Pick what to work out: future value of a lump sum, present value of a future amount, future value of payments, or present value of an annuity.
- Enter the amount (or the payment), the yearly rate and the number of years.
- Choose how often interest compounds; in payment modes, payments follow the same schedule. Pick end or start of each period.
- Or tap Say It All: “Future value of 10,000 at 6 percent for 10 years, compounded monthly.”
The Formula
All four answers use the rate per period (i = yearly rate ÷ periods a year) and the number of periods (N = years × periods a year). An annuity due, with payments at the start of each period, earns one extra period of interest, so it multiplies by (1 + i).
- Future value of a lump sum: FV = PV × (1 + i)^N
- Present value of a future amount: PV = FV ÷ (1 + i)^N
- Future value of payments: FV = PMT × ((1 + i)^N − 1) ÷ i [× (1 + i) for an annuity due]
- Present value of an annuity: PV = PMT × (1 − (1 + i)^−N) ÷ i [× (1 + i) for an annuity due]
Worked Examples
| Scenario | Inputs | Result |
|---|---|---|
| Lump sum, grown | $10,000 at 6% for 10 years, monthly | Future value $18,193.97 (yearly compounding: $17,908.48) |
| Investor.gov's candy-bar example | $365 at 5% a year | $465.84 after 5 years · $1,577.50 after 30 years [3] |
| A future goal in today's money | $50,000 needed in 10 years at 5% a year | Present value $30,695.66 |
| Monthly saving | $500 a month at 6% for 10 years | $81,939.67 at month end · $82,349.37 at month start (annuity due) |
| An income stream | $1,000 a month for 20 years at 5% | Present value $151,525.31 (annuity due: $152,156.67) |
Illustrative examples, not projections. Figures use the tax year shown and the assumptions above.
What Is the Time Value of Money?
A dollar today is worth more than a dollar later, because today's dollar can earn interest. Future value is the value of an asset at a set date in the future [1]; compound interest is interest paid on the principal and on the interest already earned [2]. Present value runs the same math backwards: the amount you would need today, at a given rate, to have a future sum.
Business owners use it to compare a payment now with payments later, to price equipment leases, and to see what a savings plan adds up to.
What Is the Difference Between an Ordinary Annuity and an Annuity Due?
In an ordinary annuity, each payment comes at the end of the period, like most loan payments and deposits from a paycheck. In an annuity due, each payment comes at the start, like rent. Payments at the start have one more period to earn interest, so an annuity due is worth (1 + i) times as much: $500 a month for 10 years at 6% is $81,940 at month end and $82,349 at month start.
What Rate Should I Use to Discount?
Use the return you could reasonably earn elsewhere on money with similar risk: a savings or CD rate for safe money, a long-term expected return for investments. A higher rate means a lower present value. Rates and returns change over time, so try more than one.
Frequently Asked Questions
What is $10,000 worth in 10 years at 6%?
$17,908 compounded yearly, or $18,194 compounded monthly.
How much do I need today to have $50,000 in 10 years?
About $30,696 if it earns 5% a year, compounded yearly.
What is the present value of $1,000 a month for 20 years?
At 5% compounded monthly, about $151,525 with payments at month end. That is the lump sum that would pay $1,000 a month for 20 years and run out with the last payment.
How much will $500 a month grow to in 10 years?
At 6% compounded monthly, $81,940 with deposits at month end: $60,000 of deposits and $21,940 of interest.
Is a higher discount rate better?
It depends on the question. A higher rate makes future money worth less today, so present values fall. For future values, a higher rate means more growth.
Sources
- Future Value (glossary) — U.S. Securities and Exchange Commission (Investor.gov)
- Compound Interest (glossary) — U.S. Securities and Exchange Commission (Investor.gov)
- Small Savings Add Up to Big Money — U.S. Securities and Exchange Commission (Investor.gov)
Official sources only: the IRS, SSA, BLS and other government agencies. Read how Zentavos researches.