Present Value

Money you will get in the future is not the same as money you have now. One way to look at it is to ask, what amount of money now, invested at the current interest rate, will be worth the same as that money when I get it. To find out what your future money is worth now, click Utilities, then Compound Interest and then Present Value.

This window opens.

 

You fill all the boxes except the last two.

Principal: this is the amount of money you will receive in the future. Do not type a dollar sign.

Nominal Annual Rate: this is the interest rate per year.

Compounding: interest can be calculated in various ways. Usually this is Daily or Monthly.

Enter the present date and the future date you will receive the money. Hit Calculate.

 

In the above example, $1500, to be received in 2 years time, is worth $1357.27 now, using interest of 5% compounded daily.

 

The 730 Complete Conversions refers to the 730 days in that two-year period, days because it is compounded daily.

 

If you do not know the interest rate, but you know the value now and the value in the future, fill them in but leave the Nominal Annual Rate blank. Calgraph will figure out the rate of interest.