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NPV Calculator

Net Present Value (NPV) tells you whether an investment or project is worth doing by comparing the value of future cash flows today with the money you put in.

How it works Report a problem

NPV Calculator

Evaluate the profitability of an investment over time

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Net Present Value (NPV)
Total Cash Flows
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Decision
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Discounted Cash Flow Analysis

Money tomorrow is worth less than money today, so a project's future cash flows must be discounted before they can be compared with its cost. NPV does exactly that. This calculator discounts each year's flow at your rate and tells you whether the project creates or destroys value.

How to use this calculator

  • Enter the initial investment (as the year 0 cost).
  • Add each year's expected cash flow.
  • Enter the discount rate: your required return or cost of capital.
  • Press calculate to see the net present value.

Reading the answer

Positive NPV: the project earns more than your required rate, after accounting for time — financially, it passes. Negative NPV: it falls short, however good the raw totals looked. NPV is the stricter test because undiscounted totals always flatter projects with distant returns.

Frequently asked questions

What discount rate should I use?
Typically your cost of capital or the return you require for this level of risk. Higher risk means a higher rate, which makes distant flows count for less.
What is the difference between NPV and IRR?
NPV gives a money amount at your chosen rate. IRR gives the rate at which NPV would be zero. NPV is generally the more reliable decision rule when the two disagree.
Does NPV handle uneven cash flows?
Yes, that is its strength. Each year is discounted by its own year count, so irregular and even negative middle years are handled properly.