NPV Calculator
Calculate net present value for a series of cash flows. Free NPV calculator discounting each period and showing whether a project adds value.
About the NPV Calculator
Net present value (NPV) discounts a project's future cash flows back to today and subtracts the initial investment, telling you whether the project creates or destroys value. This free NPV calculator takes your initial outlay, a stream of cash flows and a discount rate, and shows the NPV along with each period's discounted value.
The formula is NPV = −C₀ + Σ Cₜ ÷ (1 + r)ᵗ, where C₀ is the upfront cost, Cₜ is the cash flow in period t and r is the discount rate. A positive NPV means the project earns more than your required return and adds value; a negative NPV means it falls short.
Business owners appraising investments, finance students and anyone comparing projects use NPV as the gold-standard decision rule. Everything computes in your browser with no signup.
How to Use the NPV Calculator
- 1Enter the initial investment (the upfront cost at time 0).
- 2Enter the cash flow expected in each future period.
- 3Set the discount rate (your required return or cost of capital).
- 4Read the NPV and the accept/reject indicator.
Frequently Asked Questions
How do I calculate net present value?
Discount each future cash flow by (1 + r)ᵗ and subtract the initial cost. Investing 100,000 for flows of 40,000, 50,000 and 60,000 over three years at 10% gives −100,000 + 36,364 + 41,322 + 45,079 = 22,765 NPV — a value-creating project.
What does a positive or negative NPV mean?
A positive NPV means the project returns more than your discount rate requires, so it adds value and should be accepted. A negative NPV means it earns less than required and destroys value. An NPV of exactly zero means it earns precisely the discount rate.
What discount rate should I use?
Use your cost of capital or the return you could earn on a comparable-risk alternative. A higher discount rate penalises distant cash flows more heavily, lowering NPV. Small changes in the rate can flip a project from positive to negative, so test a range.
What is the difference between NPV and IRR?
NPV gives a value in currency at a chosen discount rate; IRR gives the single rate that makes NPV zero. NPV directly measures value added and is generally preferred, especially when comparing projects of different sizes.