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NPV Calculator
Net present value adds up a project’s future cash flows in today’s money and subtracts what it costs to start. Enter the initial investment, a discount rate and the cash flow for each year. A positive NPV means the project earns more than the discount rate; a negative one means it earns less.
- Present value of the cash flows
- $12,381.38
- Profitability index
- 1.238
- Undiscounted net cash
- $5,000.00
- Years of cash flow
- 4
Discounted cash flows
| Year | Cash flow | Present value | Running NPV |
|---|
Saved setups
Save a set of inputs you reuse — your usual rate, your loan, your room sizes — and load it back in one tap.
Your recent calculations
Results you calculate here are kept on this device so you can come back to them.
Formula
How to use it
- Enter the upfront cost as a positive number.
- Enter the discount rate — your required return or cost of capital.
- List the net cash flow for each year in order, separated by commas.
- Read the NPV; the table shows each year’s discounted value and the running total.
Worked examples
$10,000 invested for returns of $3,000, $4,000, $5,000 and $3,000, discounted at 8%
- Net present value
- $2,381.38
- Present value of the cash flows
- $12,381.38
- Profitability index
- 1.238
- Undiscounted net cash
- $5,000.00
- Years of cash flow
- 4
$1,000 invested for $500 a year for three years at 10%
- Net present value
- $243.43
- Present value of the cash flows
- $1,243.43
- Profitability index
- 1.243
- Undiscounted net cash
- $500.00
- Years of cash flow
- 3
How to use the answer
Accept projects with an NPV above zero and, when choosing between them, prefer the higher NPV. The profitability index helps when money is limited: it is the present value gained per dollar invested, and anything above 1 adds value.
The result is only as good as the discount rate and the forecasts. Try a rate a few points higher and cash flows somewhat lower; a project that stays positive under both is robust. Cash flows are assumed to arrive at the end of each year.
Questions people ask
How do I calculate NPV?
Divide each year’s cash flow by (1 + rate) raised to the year number, add them up and subtract the initial cost. $1,000 invested for $500 a year for three years at 10%: 454.55 + 413.22 + 375.66 − 1,000 = $243.43.
What does a positive NPV mean?
The investment returns more than the discount rate. $10,000 returning $3,000, $4,000, $5,000 and $3,000 has an NPV of $2,381.38 at 8%, so it beats an 8% alternative by that much in today’s money.
What discount rate should I use?
Businesses use their weighted average cost of capital, often 8–12%. For personal decisions, use the return you could earn on the next-best use of the money at similar risk.