# Present Value of Lump Sum Calculator

###### Updated: Jun 11, 2018

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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Background Information

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

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