Present Value of Lump Sum Calculator
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
All processing happens on the client-side, locally in your browser. No data is uploaded.
History
- 2018-06-11Tool Launched
Background
- 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