This is all in one Present Value Calculator with lump sum, regular contribution, selecting investment frequency and many more in-built features. Present Value Calculator can be use as Net Present Value Calculator, Present Value Interest Factor of Annuity Calculator and Discounted Cash Flow Calculator. It can be use as Investment Calculator, Savings Calculator and many more calculators related to other types of investment.
Note: (1) We have created separate version compatible with google spreadsheets. (2) Click on “Enable Editing” option after you see “Protected View” default message in excel sheet.
What is Present Value (PV)?
Present value (PV) refers to current value of future amount of money. It is the current value of tomorrow’s cash, available at discounted rate of interest. It is also known as discounted value, which means greater discount rate, lower the present value of future amount.
Present Value gives an idea whether sum of money today is worth more than same value in the future. It means future amount of cash is not worth as equal amount of cash received today. Present Value refers to buying power of future to purchasing power at present.
Present value is calculated by assuming rate of return that could be earned over specific period of time. It is generally used in finance i.e. Valuation of stock, bond price etc.
Present Value Formula
You can calculate present value based on mathematical formula given below.
Present Value (PV) = fv / (1+rate) ^ nper
To calculate in PV, you can use present value formula in excel given below.
=PV (rate, nper, pmt, [fv], [type])
Here fv refers to the cash balance you want to achieve. pmt refers to regular payments made each compounding period. rate refers to the annual interest rate. nper refers to total number of compounding periods.
Present Value Example
Let us take an example of present value to understand how to calculate present value. Assume that you would like to invest today to ensure your child gets amount 500,000 after 20 years for higher education. Consider that investing in best mutual funds can give you average of 10% rate of return. Let us use our present value calculator to evaluate the result of it.
PV = 500,000 / (1 + 0.10) ^ 20 = 74,322
Based on formula we have evaluated present value. You need to invest 74,322 today for investment to grow 500,000 in 10 years at 10% annual rate of return.
What is Net Present Value (NPV)?
Net present value (NPV) refers to sum of present values of cash inflows and outflows. NPV is majorly used for determining value of business, capital project, investments etc.
Net Present Value and Net Present worth refers to cash flows occurring on different intervals. Present value depends on the period of the time from today to the cash flow. NPV also depends on the discount rate. It considers time factor for value of money. It also helps to evaluate how much an investment, project, or any financial product is worth.
Net present value is used to evaluate current investments and allows you to calculate expected return on investment in future. Future cash flow to each time period and discount rate is required to calculate NPV. In case of any investment or project, if Net NPV is positive, project is profitable.
Net Present Value Formula
You can calculate Net Present Value based on mathematical formula given below.
Net Present Value = (cf / (1 + rate) ^ nper) – initial investment amount.
To calculate in NPV, you can use Net Present Value formula in excel given below.
=NPER (rate, pmt, pv, [fv], [type])
Here cf refers to cash flow, nper refers to total number of compounding periods. rate refers to the annual interest rate. fv refers to the cash balance you want to achieve. pv refers to the present value of expected cash flow. pmt refers to regular payments made each compounding period.
Net present Value Example
Let us take an example of Net Present Value to understand it better. In this example we will see how to calculate Net Present Value for a series of cash in-flows and cash out-flows. Assume that you are expecting amount 25,000 every year over 20 years at 10% rate of return. You can calculate net present value based on above formula. Let us use our net present value calculator to evaluate the result for the same.
You need to invest 212,839 today to receive 25,000 every year after 20 years at 10% annual rate of return.
Present Value Vs Net Present Value
Let us see some of the difference between PV vs NPA along with pros and cons of present value and net present value calculator.
1) Present value is useful in making investment decisions or to determine value of liabilities, bond pricing etc. Whereas net present value is majorly used in business firms in making analysing investment decision on project, capital budgeting.
2) Present value refers to future value of cash flows required today. Net Present Value is sum of discounted future value less initial investments.
3) Present value is often used by people and easy to use.Net Present Value is normally used by Business firms to make investment decisions on projects, comparing multiple project, capital budgeting etc.
How to Use Net Present Value Calculator?
It is really straight forward to use present value calculator or net present value calculator. You need to enter few basic investment details like: future value, systematic contribution, inflation or discounted rate, start date of investment and years of investment. Rest of all the details like: Investment Summary, Interactive Chart and Table will be automatically update after entering basic details. You can use Compound Interest Calculator to evaluate Future Value of Investment.
Play with tool by changing the investment frequency and view the result. Get the customized by changing company name, number, email-id of your company and calculator name. You are not allow to re-brand or sell without our written permission. Tools listed on our website can only be use for personal and internal purpose.
Who can Use Present Value Calculator?
Here we have provided net present value calculator with interactive chart and table. You can use this all in one present value calculator as below calculators.
- Present Value (PV) SIP Calculator
- Lump Sum Present Value Calculator
- Mutual Funds Investment SIP Calculator
- Net Present Value (NPA) SIP Calculator
- Stock Market Lump Sum Investment Calculator
- Present Value Interest Factor of Annuity Calculator
- Lump Sum Inflation Calculator
- Discounted Cash Flow Calculator
- Lump Sum Net Present Value Calculator
- Investment Calculator
- And Many More Types of SIP Calculators.
You can download Net present Value Calculator excel sheet or google spreadsheet and play with it. Most importantly you can customize calculator according to your requirement. This will really assist you to provide interactive charts with personalized result to your customers.