NPV Calculator
Calculate Net Present Value to evaluate investment profitability
Enter values above to calculate
How to Use
- Enter the discount rate (required rate of return or cost of capital).
- Enter the initial investment as a positive number (it will be treated as an outflow).
- Enter the expected cash inflow for each period (year).
- Add more periods using the 'Add Period' button (up to 10 periods).
- Click 'Calculate NPV' to get the Net Present Value and investment recommendation.
About NPV
NPV Formula
NPV = Σ [CFt / (1 + r)^t] − Initial Investment, where CFt is cash flow in period t, r is the discount rate, and t is the period number. A positive NPV means the investment creates value (returns exceed the cost of capital). A negative NPV means the investment destroys value.
Choosing the Discount Rate
The discount rate represents your required rate of return or the cost of capital. For personal investments, use your opportunity cost (e.g., 7–10% if you expect the stock market to return that). For business projects, use the weighted average cost of capital (WACC). Higher discount rates make future cash flows worth less today.
NPV Decision Rule
If NPV > 0: accept the investment (it creates wealth). If NPV < 0: reject it (it destroys wealth). If NPV = 0: the investment exactly meets the required return. When comparing multiple mutually exclusive projects, choose the one with the highest positive NPV. NPV is considered the most theoretically sound investment evaluation method.
NPV vs. IRR
NPV and IRR are related but different. NPV gives the dollar value created; IRR gives the rate of return. They usually agree on accept/reject decisions, but can conflict when comparing projects of different scale or timing. NPV is preferred for capital allocation decisions; IRR is useful for communicating returns as a percentage.
Key Features
- Dynamic cash flow rows — add up to 10 periods
- Calculates NPV with precise discounting formula
- Provides accept/reject decision based on NPV sign
- Useful for project evaluation, real estate, and business investment decisions