# Present Value Calculator

Future Value
USD
Interest Rate (%)
% per time period
Time Period
Years
Present Value  =  1262.96USD
CALCULATE

Present value calculator uses three values, future value, interesting rate and time periods, and calculate the present value of a certain amount of money. It is an online a financial tool requires three positive real numbers, future value interesting rate and time periods to determine the amount of money needed to invest today in order to have a specified balance in the future.

It is necessary to follow the next steps:

1. Enter three values for future value, interesting rate and time period in the box. These values must be positive real numbers;
2. Press the "CALCULATE" button to make the computation;
3. Present value calculator will give the present value of a stream of cash flows.
Input: Three positive real numbers. The interest rate must be in interval $[0,100]$
Output: The result is a positive real number and corresponding currency after that.

Percent Value Formula:
The present value is determined by the following formula
$$PV=\frac{FV}{(1+r_t)^n}$$ where $FV$ is the future value, $r_t$ is the interest rate and $n$ is the number of periods.

## What is Present Value?

### Real World Problems Using Present Value

Present Value is an important factor in the time value of cash, which forms the backbone of accounting and finance. It is applicable in mortgages, auto loans, credit cards, etc.

### Present Value Practice Problems

Practice Problem 1 : Find the interest rate which is needed to grow $\$150$to$\$180$ in three years.

Practice Problem 2 : Find an amount of money that Ann will have in a account if he saves $\$2,500$at$3.5\%$interest for$5\$ years.

The present value calculator, formula, real world problems and practice problems would be very useful for grade school students (K-12 education) to understand the concept of an investment of money. This concept can be of significance in almost all fields of accounting and finance. For students, which want to be investors, business owners or decision makers in future, the time value of money is a critical concept and needs to be understood.