NPV Calculator
Discount a stream of future cash flows back to today and see whether the project is worth the upfront investment.
Last updated · View algorithm, constants and default inputs (JSON)
Cumulative NPV
Discounted cash flows
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| Year | Cash flow | Discount factor | Present value | Cumulative NPV |
|---|---|---|---|---|
| 1 | 12,000.00$ | 0.9259 | 11,111.11$ | -38,888.89$ |
| 2 | 12,240.00$ | 0.8573 | 10,493.83$ | -28,395.06$ |
| 3 | 12,484.80$ | 0.7938 | 9,910.84$ | -18,484.22$ |
| 4 | 12,734.50$ | 0.7350 | 9,360.23$ | -9,123.99$ |
| 5 | 12,989.19$ | 0.6806 | 8,840.22$ | -283.77$ |
| 6 | 13,248.97$ | 0.6302 | 8,349.10$ | 8,065.33$ |
| 7 | 13,513.95$ | 0.5835 | 7,885.26$ | 15,950.59$ |
| 8 | 13,784.23$ | 0.5403 | 7,447.19$ | 23,397.78$ |
| 9 | 14,059.91$ | 0.5002 | 7,033.46$ | 30,431.24$ |
| 10 | 14,341.11$ | 0.4632 | 6,642.71$ | 37,073.94$ |
About this calculator
Net present value discounts each future annual cash flow to today, then subtracts the initial investment. A positive NPV means the modeled cash flows exceed the return required by your discount rate. This simple model assumes one initial outlay followed by nonnegative annual inflows; it does not model taxes, financing, irregular dates or multiple investments. IRR and profitability index are shown only when their inputs make them defined.
Worked example
calculated with the default values below
Initial investment 50,000 $ · Cash flow in year 1 12,000 $ · Cash flow growth per year 2 % · Discount rate 8 % · Years of cash flow 10 years Net present value 37,073.94 $ · Internal rate of return (if defined) 21.99 % · Profitability index (if defined) 1.741 · Present value of inflows 87,073.94 $ · Undiscounted cash received 131,396.65 $
General background references
Disclaimer
These calculators give estimates for general information only. They are not financial, tax or investment advice and do not take your personal circumstances into account. Before borrowing, investing or filing, confirm the numbers with a qualified adviser in your jurisdiction.
Implementation source
This record describes the implementation used by this page. It is not independent validation. External references, when available, support only the stated formula or definition; estimates and custom rules retain their own assumptions.
Formula and variables
NPV = −I₀ + Σ_{t=1}^{n} C×(1+g)^(t−1)/(1+r)^t
- NPV
- net present value
- I₀
- initial investment
- C
- first-year cash flow
- g
- annual growth rate
- r
- discount rate
- n
- number of years
g and r are entered as percentages and divided by 100. Cash flows are assumed at each year-end; IRR is the rate x where NPV(x)=0. Bisection starts with [−0.9999, 1] and expands the upper bound until NPV changes sign; it runs only when a sign change exists. Profitability index = present value of inflows / I₀.
Frequently asked questions
What discount rate should I use?
The return your money could earn elsewhere at comparable risk — a company's weighted cost of capital, or for a personal decision the rate on your best alternative. The choice drives the answer more than the cash flows do, so state it explicitly. Using a rate that is too low is the standard way a project looks viable on paper and disappoints in practice.
What does a negative net present value actually mean?
It means the modeled cash flows are worth less today than the initial investment at your chosen discount rate. It does not automatically mean the project loses money; it means it falls short of that required return. A dash for IRR means the current inputs do not define one (for example, there is no initial outlay or no positive inflow). This tool assumes one initial outlay followed by nonnegative annual inflows, so it does not cover projects with multiple sign changes.