NPV Calculator
Find the net present value of a series of cash flows.
Comma-separated, one per year
Results update as you type.
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How it works
Net present value, or NPV, is the cornerstone of investment appraisal: it tells you whether a project is worth more than it costs once the time value of money is taken into account. This NPV calculator takes your discount rate, the initial investment, and the stream of cash flows the project is expected to generate in each future year, then discounts every one of those inflows back to today and subtracts the upfront cost. A positive NPV means the project is expected to earn more than your required rate of return and therefore adds value, while a negative NPV means it destroys value and should usually be rejected. The discount rate reflects the return you could earn elsewhere at similar risk, so choosing it carefully is essential; a higher rate penalises distant cash flows more heavily. Businesses use NPV to decide between competing capital projects, investors use it to value income streams, and finance students meet it as the theoretically preferred decision rule over payback period or accounting rate of return. Enter the numbers and the calculator returns the project's value in today's money.
NPV = −C₀ + Σ CFₜ / (1 + r)ᵗ
Net present value discounts every future cash flow back to today using the required rate of return, then subtracts the upfront investment. Each year's cash flow is divided by one plus the discount rate raised to the power of the year number, which shrinks distant money more than near money because a dollar today can be invested to grow. Summing the discounted inflows and subtracting the initial outlay gives the value the project adds in today's dollars.
Source:Discounted cash flow analysis
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Worked example
How to use this calculator
- 1
Enter your values
Enter discount rate, initial investment and yearly cash flows.
- 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 sum of all a project's future cash flows discounted to today's dollars, minus the initial investment. It measures how much value a project adds after accounting for the time value of money. A positive NPV means the investment is expected to return more than the required rate, while a negative NPV means it falls short and should generally be avoided.
How do I choose a discount rate?
The discount rate should reflect the return you could earn on an alternative investment of similar risk, often the company's weighted average cost of capital or a required hurdle rate. A higher discount rate reduces the present value of distant cash flows more sharply. Choosing it well matters because small changes in the rate can flip a project's NPV from positive to negative.
What does a positive NPV mean?
A positive NPV means the discounted value of a project's expected cash inflows exceeds the initial cost, so the project is forecast to earn more than your required rate of return and create value. Under the NPV rule, you accept projects with a positive NPV and, when choosing among mutually exclusive options, pick the one with the highest NPV.
How is NPV different from IRR?
NPV gives a dollar amount of value added at a chosen discount rate, while the internal rate of return gives the single rate at which NPV equals zero. NPV is generally preferred because it measures absolute value and handles unusual cash flow patterns reliably, whereas IRR can be misleading when cash flows change sign more than once or when comparing projects of different sizes.
Should cash flows be entered before or after tax?
Use after-tax cash flows for a realistic appraisal, because taxes reduce the money a project actually delivers to investors. Also include only incremental cash flows caused by the project and exclude sunk costs already spent. Consistency matters: if your discount rate is a nominal after-tax rate, your cash flows should also be nominal and after tax so the comparison is valid.