NPV Calculator
Estimate the net present value of an investment from one upfront cost and equal yearly cash inflows. A positive NPV means the project adds value at your chosen discount rate.
Calculate NPV
How it works
What this result means
NPV converts all future cash flows into today's dollars, then subtracts the initial investment. A positive NPV means the investment creates value above the discount rate. A negative NPV means it destroys value at that rate.
Formula:
NPV = −Initial + Σ [ CFₙ ÷ (1 + r)^t ]
Where:
Initial = upfront investment (entered as positive, treated as negative)
CFₙ = net cash flow in period t
r = discount rate as a decimal (reflects opportunity cost)
t = period number (year 1, 2, 3 …)
Σ = sum over all periods
- Enter the initial investment and discount rate
- Add each year's expected net cash flow
- Each future cash flow is discounted to its present value
- NPV = sum of discounted flows minus initial investment
Example
$10,000 investment, $3,000/year for 5 years, 8% discount rate: NPV ≈ +$1,978 — the investment adds value.
Use this tool for
- Comparing simple investment or project options
- Checking whether expected returns clear your discount rate
- Learning how present value affects decision-making
Common questions
- What discount rate should I use? Often the cost of capital or required return (e.g. WACC, hurdle rate). It reflects the opportunity cost of the investment.
- What if NPV is negative? A negative NPV means the project is expected to destroy value at the given discount rate. You would typically reject it.