Present Value of Lump Sum Calculator is a tool that helps calculate the present value of lump sum based on the fixed interest rate per period

- Present Value Of Lump Sum:
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- What does Lump Sum mean?
- It refers to maturity amount of a present value lump sum investment, or a one-time investment, after a specified number of years.

- Formula
PV = FV / (1 + r) ^ t

Where:-

- PV = present value of lump sum
- FV = future value of lump sum
- r = interest rate per period
- t = number of compounding periods

- Example
A person wants to purchase a house in two years. He expects that he would need to have $20,000 at that time to use as a down payment. The certificate of deposit pays 5% per year.

In this case, we know that the future value is $20,000 and time frame (2 years) and the interest rate (5% per year). Therefore, apply the above formula:-

- PV = 20,000 / (1.05) ^ 2 = 18,140.59