NPV Calculator

Calculate the Net Present Value (NPV) of any investment or project. Add your expected cash flows year by year and enter your discount rate to see if the investment creates value.

Net Present Value formula
NPV = Σ [ CFt ÷ (1 + r)ᵗ ] − Initial Investment
Investment details Includes IRR
$
Upfront cost (entered as positive)
%
Required rate of return
Annual cash flows
Year 1
$
Year 2
$
Year 3
$
Year 4
$
Year 5
$
Frequently asked questions
What is NPV and why does it matter? ›
Net Present Value (NPV) measures the value an investment creates after accounting for the time value of money. A positive NPV means the investment returns more than the required rate of return — it creates value. A negative NPV means it destroys value. NPV is the gold standard for capital budgeting decisions in business and investing.
What discount rate should I use? ›
The discount rate represents your required rate of return or opportunity cost. Businesses often use their Weighted Average Cost of Capital (WACC), typically 8–12% for established companies. Individual investors might use their expected stock market return (7–10%). If unsure, 10% is a common conservative default.
What is IRR and how does it relate to NPV? ›
IRR (Internal Rate of Return) is the discount rate that makes NPV equal to zero. If IRR > your discount rate, the project is worth doing. NPV and IRR usually agree on whether to accept or reject a project, but NPV is more reliable when comparing projects of different sizes or durations.
What does a positive vs. negative NPV mean? ›
Positive NPV: the investment creates value above your required return — generally accept it. Zero NPV: the investment exactly meets your required return — indifferent. Negative NPV: the investment destroys value below your required return — generally reject it. Always compare NPV across competing projects and choose the highest positive NPV.

About this NPV calculator

This NPV calculator discounts each year's cash flow back to present value using your discount rate, sums them all, and subtracts the initial investment. It also estimates the Internal Rate of Return (IRR) using binary search — the rate at which NPV would equal zero.

NPV is the most widely used method for evaluating investments and capital projects in corporate finance. It accounts for the time value of money, making it superior to simple payback period or total return calculations.