Tool
Present and future value
Bring a future amount back to today's pesos (present value), or project a present amount into the future (future value), at the rate you choose.
Future value
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At the rate and term entered
Factor applied—
Difference vs original amount—
Assumptions & method
- Future value: FV = M × (1 + r)^years. Present value: PV = M ÷ (1 + r)^years. Annual compounding.
- The correct rate depends on the question: use your opportunity cost (what you'd earn in another alternative) to discount, or the expected return to project.
- It does not account for taxes or interim contributions (for that, use the investment plan).
- It's the basic arithmetic behind every financial decision: comparing money at different points in time requires bringing it all to the same point in time.
FAQ
The essentials, in brief
What is present value for?
To compare apples to apples: a $120,000 payment 2 years from now isn't worth $120,000 today. Discounting it at your rate tells you what it's worth today and lets you compare it against receiving, say, $100,000 in cash now.
What rate should I use to discount?
Your opportunity cost: the rate at which you could genuinely invest that money at comparable risk. For safe cash flows, a natural benchmark in Mexico is the CETES (Mexican T-bill) rate for a similar term.
Why annual compounding?
For simplicity, and because over multi-year horizons the compounding frequency matters less. If you need monthly compounding, the compound interest calculator includes it.
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