NPV Calculator
Discount a series of cash flows to their net present value using a chosen discount rate.
Independently verified for accuracy
Calculator by Toolsloft ↗- Net present value
- 388.77
- Undiscounted sum
- 800
Net present value discounts a series of future cash flows back to what they are worth today and subtracts the initial investment. This calculator takes your discount rate and a list of cash flows in order, then returns the NPV along with the plain sum of every flow for comparison. A positive NPV means the projected returns, in today money, exceed the upfront cost.
How this is calculated
Each cash flow is discounted by (1 plus the rate) raised to its period, with period zero left undiscounted as the initial investment, then summed. The rate is the discount rate divided by 100. The undiscounted total is the simple sum of all cash flows, shown so you can see how much discounting changed the result.
How to use
- Enter your discount rate as an annual percentage.
- Enter the cash flows in order, comma-separated, with the first one usually negative for the initial investment.
- Use a negative number for money going out and a positive number for money coming in.
- Read the net present value and the undiscounted sum of all flows.
Examples
- 10% rate, -1000 then 300, 400, 500, 600:
NPV 388.77 - 0% rate, -500 then 200, 200, 200:
NPV 100
FAQ
- What does NPV tell you?
- It tells you whether a project earns more than your required rate of return. A positive NPV means the discounted cash flows are worth more than the initial outlay, so the investment adds value; a negative NPV means it falls short.
- Why is the first cash flow usually negative?
- The first cash flow is the initial investment, money you pay out at time zero before any returns arrive. Entering it as a negative number lets the calculator subtract that cost from the discounted value of the later inflows.
- How do I choose a discount rate?
- Use the return you could earn on a comparable investment of similar risk, often your cost of capital or a required hurdle rate. A higher rate discounts future flows more heavily and lowers the NPV.