๐ NPV Calculator
Calculate net present value of investment cash flows
Enter expected cash flows for each year, separated by commas
How NPV Calculation Works
Formula
NPV = โInitial Investment + ฮฃ(Cash Flow_t / (1 + r)^t)
- 1Enter the initial investment (as a negative cash flow at time 0).
- 2Enter expected cash flows for each future period.
- 3Enter the discount rate (cost of capital or required return).
- 4Each future cash flow is discounted to present value.
- 5All present values are summed. Positive NPV = profitable investment.
About NPV Calculator
Calculate Net Present Value of a series of cash flows. Evaluate investment profitability by discounting future cash flows to present value. Include initial investment and variable returns.
Frequently Asked Questions
What does a positive NPV mean?
A positive NPV means the investment is expected to generate more value than it costs, after accounting for the time value of money. It's generally worth pursuing. The higher the NPV, the more profitable.
What discount rate should I use for NPV?
Use your company's weighted average cost of capital (WACC) or your required rate of return. For personal investments, use your opportunity cost โ what you could earn elsewhere at similar risk.
What is the difference between NPV and IRR?
NPV gives a dollar amount of value created. IRR gives the rate of return where NPV equals zero. NPV is generally preferred because it accounts for project scale and assumes reinvestment at the discount rate.