Present Value of Cash Flows Calculator
Calculate the present value of a series of future cash flows using a discount rate. Add positive or negative cash flows, choose their periods, and see the present value of each amount.
Calculate Present Value
Enter the discount rate for one selected period. For example, with Years selected, enter the annual discount rate.
Cash Flow Worksheet
Enter each cash flow and the period in which it occurs.
Calculation Details
Present Value by Cash Flow
| Period | Description | Cash Flow | Discount Factor | Present Value |
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Present value formula
How to Use the Present Value of Cash Flows Calculator
Start by entering the discount rate that applies to each selected period. If you select Years, for example, enter the annual discount rate. If you select Months, enter the monthly rate.
Add each expected cash flow to the worksheet and enter the period in which it occurs. Positive values represent cash received, while negative values can represent costs, investments or other cash outflows.
The calculator discounts each cash flow separately and then adds the individual present values together.
Present Value Formula
In the formula, PV is present value, CF is the future cash flow, r is the discount rate per period, and t is the number of periods between today and the cash flow.
For multiple cash flows, each cash flow is discounted separately and the resulting present values are added together.
What Is Present Value?
Present value expresses a future amount of money in today's terms. A future cash payment is generally worth less today when a positive discount rate is applied because the value is reduced according to how far in the future the payment occurs.
The higher the discount rate or the further away the cash flow occurs, the lower its calculated present value, assuming the future cash flow itself remains unchanged.
Example
Suppose three future cash flows of £10,000, £12,000 and £15,000 are expected at the end of years 1, 2 and 3, and the discount rate is 8% per year.
The calculator discounts each amount according to its year. The year-three cash flow receives more discounting than the year-one cash flow because it occurs further into the future.
The individual present values are then added to produce the present value of the full cash-flow series.
Period 0 Cash Flows
Period 0 represents money received or paid today. Because no time passes before a period-0 cash flow occurs, its discount factor is 1 and its present value is equal to the cash flow entered.
This can be useful when a calculation contains both an amount paid today and future inflows or outflows.
Discount Rate and Period Type
The discount rate entered in this calculator applies to one selected period. An 8% rate with Years selected means 8% per year. With Quarters selected, it means 8% per quarter.
Discount Rates, Inflation and Cash Flows
The discount rate should be consistent with the way the future cash flows have been estimated. For example, cash flows expressed in today's prices should normally be paired with a discount rate that is also expressed on a real basis.
If future cash flows include expected inflation, the discount rate should be selected on a consistent basis. Mixing cash flows and discount rates that use different inflation assumptions can produce misleading present-value results.
Discounting and adjusting for inflation are related but separate calculations. The appropriate treatment depends on the purpose of the valuation and the assumptions used to estimate the future cash flows.
For a detailed example of how discounting and present values are used in economic appraisal, see HM Treasury's Green Book supplementary guidance on discounting .
Present Value vs Net Present Value
This calculator determines the combined present value of the cash flows entered. It can include both positive and negative cash flows, including a period-0 amount.
Net present value, or NPV, is commonly used for investment appraisal and often compares future discounted cash flows with an initial investment. A dedicated NPV calculator can provide additional investment-specific inputs and results.
Limitations
The calculation assumes that the discount rate remains constant for all cash flows and that each period is evenly spaced according to the period type selected.
It does not calculate irregular-date discounted cash flows, changing discount rates, inflation forecasts, investment risk, taxes or exchange-rate changes.
Results are mathematical estimates and should not be treated as financial, investment, tax or accounting advice.
Frequently Asked Questions
What discount rate should I use?
The appropriate discount rate depends on the purpose of the calculation and the assumptions being made. The calculator does not select a rate for you. Enter the rate appropriate to your own calculation.
Can I enter negative cash flows?
Yes. Enter cash received as a positive value and cash paid as a negative value. For example, an initial payment of £5,000 can be entered as -5000.
What does period 0 mean?
Period 0 means today. A cash flow occurring today is not discounted, so its present value is equal to the cash flow itself.
Can I use months instead of years?
Yes. Select Months as the period type and enter a discount rate that applies to one month. The calculator does not automatically convert an annual rate into a monthly rate.
Does changing the currency change the calculation?
No. The currency selector changes only how monetary results are displayed. CalcAtlas does not perform currency conversion or apply exchange rates.
Is this the same as an NPV calculator?
The underlying discounting principle is closely related, but this calculator focuses on the present value of the cash flows entered rather than providing a dedicated investment-appraisal workflow.