Method Deck / finance
Present value of a lump sum
Computes the present value of a single future cash amount, discounted at a given annual rate.
Published for review. The Founder is checking every card himself; anything he strikes comes down the same hour.
Try it
Inputs
- future_value (number, currency units, required) min 0 : Amount to be received in the future
- annual_discount_rate_percent (number, %, required) min 0 : Annual discount rate
- years (number, years, required) min 0 : Number of years until the amount is received
Outputs
- present_value (currency units): Value of the future amount in today's terms
Steps
- Convert the annual rate to a decimal: r = annual_discount_rate_percent / 100.
- present_value = future_value / (1 + r) ^ years.
- Round present_value to 2 decimals (money to cents).
Constants
None.
Sources
- Principles of Corporate Finance (McGraw-Hill, 2026-09-30T19:31:29Z) - PV = FV / (1+r)^n
Worked example and test vectors
| Name | Inputs | Answer |
|---|
| worked example | {"future_value":10000,"annual_discount_rate_percent":5,"years":10} | $6,139.13 |
| test vector: short horizon | {"future_value":1000,"annual_discount_rate_percent":8,"years":1} | $925.93 |
Published card
- Address:
3328c20034229a4594ee07438eb2b123
- Made at:
2026-09-30T22:39:30.722Z
- Method sha256:
adf9339a91636ce36baa08d3eb2fa04d720166314898660bfb10e4febe33f555