NPV Calculator
Calculate the Net Present Value of a series of cash flows. Enter a discount rate and your expected cash flows to see whether an investment adds value in today's dollars.
First value is usually the initial investment as a negative number.
Net Present Value (NPV)
$-21.04
Negative NPV — the project is expected to destroy value at this discount rate.
What is Net Present Value?
The Net Present Value (NPV) is the sum of a series of cash flows, each discounted back to today using a chosen rate. It answers a fundamental question in finance: given what I will pay and what I expect to receive, is this investment worth more in today's money than it costs?
The discount rate reflects the time value of money and the risk of the cash flows. A dollar received next year is worth less than a dollar today because you could have invested today's dollar and earned a return. Discounting each future cash flow by the rate turns all of them into equivalent present-day dollars that can be summed.
A positive NPV means the investment is expected to add value beyond the required return, while a negative NPV means it is expected to destroy value. An NPV of zero means the project exactly meets the hurdle rate — the same rate at which the Internal Rate of Return (IRR) equals the discount rate.
NPV is the gold standard for investment decisions because it measures absolute wealth creation in dollars, not a percentage. That makes it more reliable than IRR when comparing projects of different sizes, and it pairs naturally with a sensitivity analysis on the discount rate to test how robust the conclusion is.
How to calculate NPV
- 1
Enter the discount rate
Type the annual discount rate as a percentage, such as 10 for 10%. This is your required return or cost of capital.
- 2
List the cash flows
Enter the initial investment as a negative number, followed by the expected returns in each period, separated by commas.
- 3
Read the NPV
The tool discounts each flow and sums them. A positive result means the project adds value at the chosen rate.
Why use an NPV calculator?
Dollar value
NPV measures wealth creation in today's dollars, making it more reliable than a percentage alone.
Time-aware
Each cash flow is discounted by when it occurs, so sooner returns count for more than distant ones.
Clear verdict
Positive NPV means add value, negative means destroy value. The sign of the result gives a direct go or no-go.
FAQ
Frequently Asked Questions
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