CalcArcade.

NPV Calculator

Enter your discount rate, the money you invest at the start and the cash you expect each year. You get the net present value, the internal rate of return, how long payback takes and the profitability index.

Your numbers

Result

Estimate for information only, not professional advice. Last reviewed .

How we calculate it

Net present value is NPV = −C0 + CF1 ÷ (1 + r) + CF2 ÷ (1 + r)^2 + … where C0 is the initial investment, CFt the cash flow in year t and r the discount rate. A positive NPV means the investment earns more than the discount rate.

The internal rate of return is the rate that makes the NPV zero, found by repeated bisection. The payback period is how long cumulative cash flow takes to repay the investment, and the profitability index is the present value of the cash flows divided by the investment. With 1,000 invested and flows of 500, 400, 300 and 200 at 10%, the NPV is 147.12.

Assumptions and limits

  • Cash flows are assumed to arrive at the end of each year, and the initial investment at the start.
  • Cash flows that change between positive and negative can have more than one IRR. The calculator shows one and warns you.
  • The result is only as good as the cash flow estimates and the discount rate you chose. Taxes are not included.

Frequently asked questions

What does a positive NPV mean?

It means the present value of the money you expect is larger than the money you put in, when discounted at your chosen rate. Projects with a positive NPV are generally worth considering.

What is the difference between NPV and IRR?

NPV is an amount in money at your discount rate. IRR is a percentage, the rate at which the NPV would be zero. NPV is easier to compare across projects of different size.

How do I enter the cash flows?

List one number for each year, in order, separated by commas, spaces or new lines. Use a negative number for a year with an extra outflow.

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Worked example (a fixed example using the starting numbers, it does not change as you type)

Inputs: Discount rate (% per year) = 10; Initial investment ($) = 1000; Cash flows for years 1, 2, 3 and so on (separate with commas) = 500, 400, 300, 200.

  • Net present value $147.12
  • Internal rate of return 17.8%
  • Payback period 2.33 years
  • Profitability index 1.147
  • Present value of cash flows $1,147.12

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Last reviewed: . Formulas and assumptions are described on our methodology page. For information only; not professional advice.