Present Value Calculator is used to computing the current value of an asset. We can use this calculator when we want to analyse the impact of inflation on future savings.
If you are awaiting to receive some lump sum of funds in the future, you might desire to know what is its value or worth in today's Rupees and to you. It is advised to ponder about future money in present value terms to avoid any unrealistic optimism and make comparisons between investment alternatives.
Fintra's Present Value Calculator makes the procedure very easy by converting future lump sum into today's Rupees so that you can have a more realistic idea of the value received.
To obtain accurate results you need to provide the following data:
When all data has been filled into the Present Value Calculator, click on “Submit”, and instantly results will be displayed.
Mathematically:
Present Value = Future Value (1+r/100)^(-t) where r is the interest rate and t is time duration.
What Is Present Value?
The present value is referred to the current value of a future sum of money or stream of cash flows provided at a specified rate of return. Since future cash flows are discounted at discount rates, thus, the higher the discount rate, the lower will be the present value of the future cash flows. It is vital to determine the appropriate discount rate to accurately valuing future cash flows, whether they're earnings or debt obligations.
When Is The Present Value Used?
There are various reasons to use the present value formula. It can be used independently in various areas of finance to discount future values for business analysis, and it can be used as a component of other financial formulas.
As an example, the present value is largely used when planning for early retirement because you need to calculate future income and expenses.
It is also used to provide rough ideas of the amount of money required at the start of your retirement to fund your needs.
