NPV (Net Present Value) Calculator

NPV = sum of discounted future cash flows minus initial investment. Positive NPV = accept project.

Inputs

Year 1, year 2, …

Result

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How to use this calculator

  • Enter discount rate.
  • Enter initial investment as a positive number.
  • List annual cash flows (year 1, year 2, …) separated by commas.

About this calculator

Net Present Value sums the discounted future cash flows of a project and subtracts the initial investment. NPV > 0 means the project earns more than the required return — accept. NPV < 0 means it earns less — reject. The discount rate is typically WACC (for corporate projects) or required return (for individual investors).

Frequently asked

Why discount future cash flows?+
Money today is worth more than money tomorrow — risk, inflation, opportunity cost. The discount rate quantifies these.
NPV vs IRR — which to use?+
NPV gives a dollar answer (best for choosing among projects). IRR gives a percentage (intuitive but problematic for non-conventional flows). Most analysts compute both.
What discount rate?+
For corporate projects: WACC. For individual investors: their required return given the risk class.
How does NPV handle uneven cash flows?+
It's designed for them. Each year's flow is discounted at its own time-distance.
When is NPV unreliable?+
When future cash flow estimates are wildly uncertain. NPV is only as good as the inputs.

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