NPV Calculator

Net Present Value discounts every future cashflow back to today's dollars and subtracts the upfront cost. NPV > 0 → the project earns more than your required return; NPV < 0 → it doesn't. IRR is the discount rate that makes NPV = 0 — the project's break-even return.

Project inputs

Initial investment ($)

The period-0 outlay. Enter as a positive number.

Discount rate (%)

Your hurdle rate, WACC, or required return.

Expected cashflows

Period 1

Period 2

Period 3

Period 4

Period 5

Negative numbers are allowed for mid-life capex or maintenance outlays.

Net Present Value

$444.34

Decision: Accept

IRR

23.29%

Total inflows

$2,000.00

PV of inflows

$1,444.34

Period	Cashflow	Discount factor	Present value	Cumulative PV
0	-$1,000.00	1.000000	-$1,000.00	-$1,000.00
1	$200.00	0.909091	$181.82	-$818.18
2	$300.00	0.826446	$247.93	-$570.25
3	$400.00	0.751315	$300.53	-$269.72
4	$500.00	0.683013	$341.51	$71.78
5	$600.00	0.620921	$372.55	$444.34

How NPV is calculated

The formula is NPV = Σ [CF_t / (1+r)^t] − Initial. Each future cashflow is divided by (1+r)^t where r is the per-period discount rate and t is how many periods out it lands. The discount rate captures opportunity cost: a dollar next year is worth less than a dollar today because today's dollar can earn the discount rate in the meantime.

Worked example. Invest $1,000 today. Expect $200, $300, $400, $500, $600 over the next five years. Discount rate 10%. Present value of each cashflow: $181.82, $247.93, $300.53, $341.51, $372.55 — sum $1,444.34. Subtract the $1,000 outlay: NPV = $444.34. The project beats a 10% required return; accept it. The IRR (the rate that makes NPV exactly zero) is about 23.29% — your built-in margin of safety against the discount rate being wrong.

NPV vs IRR vs Payback Period

Metric	Tells you	Watch out for
NPV	Dollar value the project adds at your required return	Sensitive to the discount rate; pick it carefully
IRR	Break-even discount rate — the project's return	Misleading with non-conventional cashflows (multiple sign changes can give multiple IRRs)
Payback period	How many periods until you recoup the outlay	Ignores time value of money and any cashflow after payback

The NPV Calculator answers the question that decides whether a project ships: does the discounted value of the future cashflows exceed the upfront cost? Enter the initial investment, your discount rate (hurdle rate, WACC, or required return), and the expected cashflows for periods 1 through N. The calculator returns the NPV, an Accept/Reject verdict, the IRR (the discount rate that makes NPV exactly zero — the project's built-in margin of safety), and a per-period breakdown showing the present value of every cashflow. Use it for capital budgeting, lease-vs-buy analysis, project rankings, equipment replacement decisions, or any time you need to compare a stream of future dollars to a check you write today.

Built by Bob QA by Ben Shipped May 15, 2026

How to use

1
Enter the initial investment as a positive number. This is the period-0 outlay — the check you write today. The calculator subtracts it from the discounted cashflow sum.
2
Enter the discount rate as a percentage. Common choices: your firm's weighted average cost of capital (WACC), the hurdle rate set by your finance committee, or the return you could earn on a comparable-risk alternative.
3
Enter each expected cashflow for periods 1, 2, 3, … N. Add or remove rows as needed. Use negative numbers for periods where the project costs money (mid-life capex, major maintenance).
4
Read the headline NPV. If it's positive, the project beats your required return — accept. If negative, it doesn't — reject. The decision label states this in plain language.
5
Read the IRR — the discount rate that drives NPV to exactly zero. The gap between your discount rate and the IRR is your margin of safety: a 23% IRR on a 10%-hurdle project means rates would have to more than double before the project stops adding value.
6
Inspect the per-period table. Each row shows the cashflow, the discount factor, the present value, and the cumulative PV — useful for spotting which years drive the result and for sensitivity analysis.

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Frequently asked questions

What does NPV actually mean?

NPV is the dollar value a project adds at your required return. NPV = $0 means the project earns exactly your discount rate — no more, no less. NPV = $5,000 means the project adds $5,000 of value beyond what you'd earn putting the same money into an alternative at your discount rate. Negative NPV means the project earns less than the alternative — you'd be better off taking the discount-rate option. The decision rule is mechanical: accept if NPV > 0, reject if NPV < 0.

How do I pick the discount rate?

Three common choices. (1) Weighted Average Cost of Capital (WACC) — what your firm pays for the blended mix of debt and equity it uses to fund projects. Most public companies disclose this. (2) The hurdle rate set by your finance team — typically WACC plus a project-risk premium (5-15 points more for risky projects, less for safe ones). (3) The opportunity cost — the return you could earn on the next-best project with similar risk. For personal use, use the return on a comparable investment you'd otherwise pick (e.g. 7-10% for an S&P 500 baseline). The NPV is highly sensitive to this number, so it's worth checking the result at a few rates.

What's the difference between NPV and IRR?

NPV gives you a dollar answer at a fixed discount rate; IRR gives you the percent return the project earns. For most go/no-go decisions they agree — if IRR exceeds your discount rate, NPV is positive, and vice versa. They can disagree when you're comparing two mutually exclusive projects of different sizes (NPV correctly favors the bigger absolute return; IRR can misleadingly favor the smaller, higher-percentage one). When NPV and IRR disagree on ranking, NPV is the right tiebreaker — you can't deposit a percentage in the bank.

What if the cashflows have multiple sign changes?

A project with cashflows like -1000, +600, -300, +800 has two sign changes (negative to positive, then back). Such 'non-conventional' projects can have multiple IRRs — multiple discount rates where NPV = 0 — making IRR meaningless as a single 'project return.' NPV remains well-defined and continues to be the right metric. The calculator's bisection finds the first IRR sign change in [-99%, +10000%]; if the project has multiple IRRs, only that one is reported. When in doubt with non-conventional cashflows, trust NPV.

Can I enter negative cashflows for mid-life capex?

Yes. Period 3 or 7 or 12 being negative is common — equipment refurbishment, regulatory remediation, a marketing push. Enter the period as a negative number; the calculator discounts it correctly. The Accept/Reject decision still uses the sign of NPV; the IRR may be undefined or non-unique if the cashflows oscillate (see the previous FAQ).

Why does the initial investment appear in period 0 with a discount factor of 1?

Money you spend today isn't discounted — it's already in today's dollars. The discount factor for period 0 is 1.000000 because (1+r)^0 = 1. Only future cashflows get discounted. This is why the formula is NPV = Σ [CF_t / (1+r)^t] for t=1..N minus the initial investment — the initial outlay is subtracted directly, not divided.

Does NPV account for taxes and inflation?

Only if you put them in. The cashflows you enter should be the actual after-tax cash you expect to receive — depreciation tax shields, operating cash, terminal value, etc., all netted. If you discount at a nominal rate (which includes inflation expectations), enter nominal cashflows; if you discount at a real rate, enter real cashflows. The most common mistake is mixing the two — discounting real cashflows at a nominal rate gives an artificially low NPV; the other way around overstates it.

How does NPV handle projects with different lifespans?

It doesn't, by default — NPV gives the total value added over each project's lifetime, but a 10-year project and a 5-year project aren't directly comparable on NPV alone (the 5-year project could be repeated to match horizons). For mutually exclusive projects with different lives, use the equivalent annual annuity (EAA) method: divide each project's NPV by the annuity factor for its life, getting a per-year equivalent. The project with the higher EAA wins. This calculator gives you the inputs; the comparison is yours to make.

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