NPV Calculator
Calculate Net Present Value of a series of future cash flows.
Net Present Value is the cornerstone of investment appraisal. A dollar next year is worth less than a dollar today, so NPV discounts every future cash flow back to today's value using a required rate of return, subtracts the initial investment, and tells you whether a project creates value. A positive NPV means the project earns more than your required return; a negative NPV means it destroys value.
Enter the upfront investment, a discount rate, and the expected cash flow for each future year (one per line), and this calculator returns the NPV along with the total undiscounted cash flow for comparison. It's the tool for deciding between projects, equipment purchases, or any investment with a stream of future returns.
How to use NPV Calculator
- 1
Enter the initial investment
The upfront cost (entered as a positive number).
- 2
Set the discount rate
Your required rate of return or cost of capital.
- 3
List yearly cash flows
One amount per line, year 1 onward.
Features
- Discounts each year's cash flow correctly
- Shows NPV and total undiscounted flow
- Flags positive vs negative NPV
Frequently asked questions
Common mistakes to avoid
- Including the initial investment in the yearly cash flows as well as the investment field, double-counting it.
- Using an unrealistically low discount rate, which flatters long-dated projects.
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