Net Present Value (NPV) Calculator
Find the NPV of an investment's cash flows.
Comma-separated, one per period
Results update as you type.
How it works
Net present value, or NPV, measures whether an investment or project is worthwhile by comparing the money you put in with the value of the future cash it generates, in today's terms, and this calculator computes it. You enter the initial investment, the discount rate, and the expected cash flow for each future period, and it returns the NPV. The core idea is the time value of money: a dollar received in the future is worth less than a dollar today, because today's dollar could be invested to earn a return. So each future cash flow is discounted back to the present by dividing by one plus the discount rate raised to the power of how many periods away it is, and these present values are summed and reduced by the upfront investment. The discount rate reflects your required return or cost of capital, and choosing it well is crucial. The decision rule is simple and powerful: a positive NPV means the investment is expected to add value beyond your required return and is worth pursuing, while a negative NPV means it destroys value and should be rejected. NPV is one of the most respected tools in finance for evaluating capital projects, business decisions, and investments because it accounts for the full timing and magnitude of cash flows. Enter the initial investment, discount rate, and cash flows to compute the NPV.
NPV = −investment + Σ CFₜ / (1 + r)ᵗ
Net present value subtracts the initial investment from the sum of all future cash flows, each discounted back to today by dividing by one plus the discount rate raised to the power of the period number. Discounting reflects that money received later is worth less than money today. A positive NPV means the investment adds value.
Source:Corporate finance
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter initial investment, discount rate and cash flows per period.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Net present value updates instantly as you type — no button to press.
Frequently asked questions
What is net present value?
Net present value is the difference between the present value of an investment's future cash flows and its initial cost. It discounts future money back to today using a chosen rate, then subtracts the upfront investment. A positive NPV means the project adds value, while a negative NPV means it does not meet the required return.
How is NPV calculated?
Discount each future cash flow to the present by dividing it by one plus the discount rate raised to the power of its period number, sum these present values, and subtract the initial investment. The calculator does this from your inputs, handling the discounting for each period automatically to give the net present value.
What does a positive or negative NPV mean?
A positive NPV means the investment is expected to earn more than your required return, adding value, so it is generally worth undertaking. A negative NPV means it earns less than required and destroys value, so it should usually be rejected. An NPV of zero means it exactly meets the required return with no extra value.
What discount rate should I use?
The discount rate should reflect your required rate of return or cost of capital, often a company's weighted average cost of capital or an investor's target return, adjusted for the project's risk. A higher rate discounts future cash flows more heavily. Choosing an appropriate rate is critical, since it strongly affects whether the NPV is positive.
How is NPV different from IRR?
NPV gives a dollar value of the extra worth an investment creates at a specific discount rate, while the internal rate of return, or IRR, is the discount rate that makes NPV zero. NPV directly measures value added and is generally preferred, while IRR expresses return as a percentage. They can sometimes rank projects differently.