Present Value Formula Explained, With Examples
Every present value result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
PV = FV ÷ (1 + r)^t.
What each input means
- Future amount (S$): the value you enter in the calculator.
- Discount rate (%): the value you enter in the calculator.
- Years: the value you enter in the calculator.
Example
For example, with these inputs:
- Future amount (S$): 100,000
- Discount rate (%): 4
- Years: 10
the calculator returns:
- Present value: S$67,556.42
How the result changes
The table keeps the other inputs at their example values and changes future amount (s$).
| Future amount (S$) | Present value |
|---|---|
| 100,000 | S$67,556.42 |
| 50,000 | S$33,778.21 |
| 75,000 | S$50,667.31 |
| 125,000 | S$84,445.52 |
| 150,000 | S$101,334.63 |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
Interest in Singapore is quoted in several ways. Mortgages and savings accounts use effective annual rates, while car loans and many personal loans are advertised at flat rates that look much lower than their true cost. Banks must disclose the effective interest rate, and comparing on that basis gives a fair picture.
Compounding is the reason long-term saving works: returns earn further returns, so the growth curve steepens over time. The same maths works against you with debt, which is why credit card balances at around 27% a year grow quickly if only minimum payments are made.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Related calculations
- Additional Registration Fee (ARF) Calculator: Calculates the tiered ARF for cars registered in Singapore.
- Car Depreciation Calculator: Works out the yearly depreciation buyers in Singapore use to compare used cars.
- Loan Calculator: Calculates repayments for an amortising loan.
- Personal Loan Calculator (Flat Rate): Singapore banks advertise personal loans at flat rates.
Use the Present Value Calculator to plug in your own numbers.
Run your own numbers: Present Value Calculator