What is a discount rate?

The return you could earn elsewhere — your opportunity cost of money.

Money today is worth more than the same amount later because it can be invested.

Why is future money worth less?

Money today can be invested, so a future sum is worth less in today's terms.

Often your expected investment return or cost of capital.

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Free present value calculator. Find what a future amount is worth in today's money at a discount rate.

Discount a future sum back to today's value: PV = FV ÷ (1 + r)ⁿ. Essential for comparing money across time.

Present value discounts a future amount to today's worth: PV = FV ÷ (1 + r)ⁿ, using your opportunity-cost discount rate.

$50,000 needed in 10 years, discounted at 7%, is worth about $25,420 today.

What is a discount rate?: The return you could earn elsewhere — your opportunity cost of money.
Why does PV matter?: Money today is worth more than the same amount later because it can be invested.
Why is future money worth less?: Money today can be invested, so a future sum is worth less in today's terms.
What discount rate should I use?: Often your expected investment return or cost of capital.