# Present Value of a Lump Sum Calculator

## What does it do?

This present value of a lump sum calculator works out the value today of a lump sum of money received at a future date, taking into account a discount rate.

More precisely, the present value of a lump sum calculator calculates the present value (PV) of a lump sum (FV) received at the end of period n using a discount rate i.

## Formula

The calculator uses the present value of a lump sum formula as shown below:

`PV = FV / (1 + i)n`

Full details of the formula can be seen at our present value of a lump sum formula page.

## Instructions

The Excel present value of a lump sum calculator, available for download below, is used to compute the present value by entering details relating to the future value, discount rate and the number of periods. The calculator is used as follows:

### Step 1

Enter the Future value (FV). The future value of the lump sum is entered. This is the amount received at the end of period n.

### Step 2

Enter the discount rate (i). The discount rate is the rate used to discount the lump sum back from the end of period n, to the beginning of period 1 (today). The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly rate.

### Step 3

Enter the number of periods (n). The number of periods is entered. A period can be any term (month, year etc), but must be consistent with the discount rate provided (see step 2)

### Step 4

The present value of a lump sum calculator works out the present value (PV). The answer is the value today (beginning of period 1) of a lump sum of money received at the end of period n, at a discount rate of i.