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Present Value Factor Calculator

Compute the present value factor (1+r)^-n from a rate and term, and instantly see the principal needed today to reach a future goal.

Input

%
yrs
$

Result

Present value factor at 3% over 20 years

0.553676

PV factor = (1 + 3%)^-20

Present value factor

0.553676

Future value factor (reciprocal)

1.806111

Principal needed for $1,000,000.00

$553,675.75

How it works

  • The present value factor is found with (1 + r)^-n, where r is the annual rate as a decimal (for example, 3% means r = 0.03) and n is the number of years, assuming annual compounding.
  • The present value factor is always less than 1 and is used to discount future money back to its present value. The higher the rate and the longer the term, the smaller the factor becomes.
  • Enter a future value (target amount) and the tool computes the principal needed = future value x present value factor. Investing that principal at rate r with annual compounding reaches the target after n years.
  • The present value factor and the future value factor are reciprocals of each other. The future value factor = (1 + r)^n, and present value factor x future value factor always equals 1.
  • This tool displays both factors to six decimal places. With real financial products, taxes, fees, and differing compounding frequencies may cause results to vary.
  • These results are estimates and do not guarantee the yield of any specific financial product or a future asset value. Make investment decisions at your own risk.