NPV Calculator

Net Present Value is the sum of the present values of all future cash flows from a project, minus the initial investment. NPV measures the total value the project is expected to add at a chosen discount rate. NPV > 0 means the project clears its cost of capital and creates value; NPV < 0 means it destroys value.

NPV = -initial + Σ CF_t / (1 + r)^t, where CF_t is the cash flow at the end of year t, r is the discount rate, and t runs from 1 to the project's last year. Each future cash flow is divided by (1 + r) raised to the period number, which discounts it to today.

Use the project's required rate of return or weighted-average cost of capital (WACC). For corporate capital budgeting, this is usually 8 to 12%. For personal projects, use the realistic alternative return you could earn with similar risk. A higher discount rate makes the NPV smaller and the accept threshold higher.

NPV uses a given discount rate and produces a dollar value. IRR solves for the discount rate that makes NPV exactly zero, producing a percent return. NPV is generally preferred for ranking mutually exclusive projects because IRR can be misleading when cash flow patterns differ.

Yes. Negative cash flows (capex spikes, mid-project losses, end-of-life cleanup costs) are common. Enter them as negative numbers in the cash-flow list. The calculator discounts negative and positive cash flows the same way.

Be consistent. Use nominal cash flows with a nominal discount rate, or real (inflation-adjusted) cash flows with a real discount rate. Mixing the two produces a biased NPV. For most practical analysis, nominal is easier.