Present Value of Cash Flows Calculator
Calculate the present value of a series of uneven or even cash flows by entering periods, amounts and a discount rate.
Calculate Present Value of Cash Flows
| Line | Periods (count) | Cash flow ($ each period) |
|---|
| Period | Cash flow | Present value |
|---|---|---|
| Total |
Each line groups consecutive periods that share the same cash flow amount. Use 0 for periods with no cash flow.
How the present value of cash flows calculator works
The present value of cash flows calculator works by discounting each individual cash flow back to today at your chosen rate, then adding all the discounted amounts together. You group periods with the same cash flow into lines, set the discount rate and compounding, and choose whether cash flows occur at the beginning or end of each period.
Entering cash flow lines
Entering cash flow lines is straightforward. Each line represents a block of consecutive periods that all share the same cash flow amount. For example, five years of $925 followed by five years of $725.25 and a final $2,500 would be entered as three separate lines.
Present value of cash flows formula explained
The present value of cash flows formula sums the discounted value of every individual cash flow. For period n, the present value equals the cash flow for that period divided by the quantity 1 plus i raised to n, where i is the rate per compounding period. Adding every period’s present value gives the total present value of the series.
Worked example for a single cash flow
Worked examples make the formula concrete. For a cash flow of $500 in period 5 at an 11 percent rate, present value equals 500 divided by 1.11 raised to the 5th power, which is 500 divided by approximately 1.685058, giving a present value of about $296.73.
Beginning versus end of period cash flows
Beginning versus end of period cash flows changes the discount exponent for every cash flow. When cash flows occur at the beginning of each period, each cash flow is discounted for one fewer period than it would be at the end, which increases the overall present value of the series.
Using this for uneven cash flow series
Using this for uneven cash flow series is the main purpose of this calculator, similar to the NPV function found in spreadsheet software. Unlike a simple lump sum calculation, this approach handles any combination of varying payment amounts across different time periods.
Reference table of cash flow variables
| Variable | Meaning |
|---|---|
| CF | Cash flow amount for a given period |
| i | Discount rate per compounding period |
| n | Period number of the cash flow |
| PV(n) | Present value of the cash flow in period n, CF / (1 + i)^n |
| PV | Total present value, the sum of all PV(n) |
Frequently asked questions
The present value of cash flows is the sum of the discounted values of every individual future cash flow in a series. Each cash flow is divided by one plus the discount rate raised to the power of its period number, then all the discounted amounts are added together.
To calculate present value of uneven cash flows, discount each cash flow individually using PV equals CF divided by the quantity 1 plus i raised to n, where n is that cash flow’s period number, then sum every discounted cash flow to get the total present value.
Present value of cash flows totals the discounted value of future receipts only, while net present value subtracts an initial investment made at time zero from that total. Net present value is used to evaluate whether a project’s future returns exceed its upfront cost.
Yes, cash flow timing matters because cash flows received at the beginning of a period are discounted for one less period than cash flows received at the end of a period. This timing difference increases the present value when cash flows occur at the beginning of each period.
Compounding frequency affects present value of cash flows by changing the discount rate applied per period. More frequent compounding within a period increases the effective discount rate, which lowers the present value of each future cash flow.
Yes, this calculator works similarly to the NPV function in spreadsheet software by discounting a series of future cash flows back to a present value using a fixed discount rate. Unlike some spreadsheet implementations, it also lets you group multiple periods with the same cash flow into a single line.