NPV Calculator
Discount a series of cash flows to present value and decide whether a project creates value.
Please note: A modelling tool, not investment advice. The result is only as sound as the discount rate and cash-flow forecasts you supply, and small changes to either can flip the sign.
What the NPV Calculator does
Net present value discounts every future cash flow back to today using your required rate of return, then subtracts the initial outlay. A positive NPV means the project earns more than your hurdle rate; a negative one means your money is better used elsewhere.
Formula
NPV = Σ (Cash flow ÷ (1 + r)ᵗ) − Initial investmentProfitability index = PV of inflows ÷ Initial investment
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Initial investment | selected currency | Yes | Enter as a positive number — it is treated as an outflow at time 0. Accepts more than 0. |
| Future cash flows | text | Yes | One value per period, starting with period 1. |
| Discount rate | % | Yes | — |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Initial investment, Future cash flows and Discount rate.
- Select Calculate.
Worked example
Invest $10,000 and receive $3,000, $4,000, $5,000 and $6,000 over four years at a 10% discount rate.
- Initial
- 10000
- Flows
- 3000, 4000, 5000, 6000
- Rate
- 10
PV of inflows $13,887.71, NPV $3,887.71 — the project adds value.
Frequently asked questions
What discount rate should I use?
Your cost of capital, or the return available on an equally risky alternative. Higher risk demands a higher rate, which lowers NPV.
NPV or IRR?
NPV when comparing projects of different sizes, because it measures value in currency. IRR is useful for a quick rate comparison but can mislead with unconventional cash flows.