Calculate present value investment of a future value lump sum based on a constant interest rate per period. The present value is the total amount that a future amount of money is worth right now.
Where pv = present value, fv = future value, rate = rate per period, and nper = number of periods.
pv = -fv / (1 + rate)^nper
Note that either the present value or future value will be a negative value.
For the default example, to yield a future value of $10,000.00 at a rate of 0.52% for 24 periods you will need a present value of -$8,829.59. If you are putting this $8,829.59 into savings or an annuity then you are paying out the money in order to receive $10,000.00 in the future. So the payout is negative cash flow to you and the final value is positive. From the perspective of the bank or financial institution the $8,829.59 is positive and the $10,000.00 is negative.
Rate per Period is the interest rate for each payment period. Number of Periods is the total number of payment periods. Make sure that you are consistent with the units (months, years or quarters) you use for specifying Rate per Period and Number of Periods.
Present Value is the lump-sum amount that a series of future payments is worth right now. For example, if you borrow $10,000 the present value to you is $10,000. If you are paying the money to a savings account then the present value is the value in the account, money you paid out.
Future Value is the future value, or a cash balance you want to attain. If you want to save $10,000, then $10,000 is the future value.
How to Calculate APR: See notes for our future value calculator.
Your goal is to have $10,000 in savings at the end of 2 years. Your account is earning 6.25% per year compounded monthly. You want to know the value you need to put in the account today to meet your goal, the future value of your savings account.