Interactive tool
Discounting and present value calculator
Calculate the present value of future costs or health outcomes, the annuity factor and the equivalent annual cost of a capital item.
Example values for demonstration. Calculations run in your browser; nothing you enter is stored or sent.
Results
Present value of the stream
8,530.20
- Undiscounted total
- 10,000.00
- Present value of one amount in year 10
- 744.09
- Annuity factor (10 years)
- 8.5302
- Equivalent annual cost of the capital item
- 1,172.31
Year-by-year table
| Year | Discount factor | Present value |
|---|---|---|
| 1 | 0.9709 | 970.87 |
| 2 | 0.9426 | 942.60 |
| 3 | 0.9151 | 915.14 |
| 4 | 0.8885 | 888.49 |
| 5 | 0.8626 | 862.61 |
| 6 | 0.8375 | 837.48 |
| 7 | 0.8131 | 813.09 |
| 8 | 0.7894 | 789.41 |
| 9 | 0.7664 | 766.42 |
| 10 | 0.7441 | 744.09 |
Related guide: Ingredients Approach to Costing: Step by Step
How it works
- Discount factor for year t = 1 ÷ (1 + r)t, where r is the discount rate
- Present value of a stream = sum of (amount × discount factor) over the years
- Annuity factor = (1 − (1 + r)−n) ÷ r for n years (n when r = 0)
- Equivalent annual cost = purchase value ÷ annuity factor
Economic evaluations discount future costs and health effects to reflect time preference. Use the discount rate set by your national guidelines or funder, and test other rates in sensitivity analysis. Budget impact analyses are usually presented undiscounted.
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