Net Present Value Calculator Inputs Discount Rate (%) Initial Inve...
Net Present Value Calculator
Inputs
Discount Rate (%)
Initial Investment (Year 0)
Cash Flows (Year 1, 2, 3...)
Results
Net Present Value (NPV):
$8,001.23
Decision:
Accept Project
Discount Rate:
10.00%
Total Cash Flows:
$120,000.00
Cash Flow Timeline
$30K
$40K
$50K
$20K
What is Net Present Value (NPV)?
Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment. It calculates the difference between the present value of cash inflows and outflows over time. A positive NPV means the project will generate more value than its cost — accept it. A negative NPV means it destroys value — reject it.
This calculator helps investors, entrepreneurs, and finance professionals make data-driven decisions by quantifying the true economic value of future cash flows in today’s dollars.
Frequently Asked Questions
Q: What does a positive NPV mean?
A: A positive NPV indicates the investment will generate returns above your required rate of return. You should accept the project.
A: A positive NPV indicates the investment will generate returns above your required rate of return. You should accept the project.
Q: Can NPV be negative?
A: Yes. A negative NPV means the investment’s returns are less than your required rate of return. Reject such projects.
A: Yes. A negative NPV means the investment’s returns are less than your required rate of return. Reject such projects.
Q: How do I choose the discount rate?
A: Use your weighted average cost of capital (WACC) or your personal required rate of return. This represents the opportunity cost of your capital.
A: Use your weighted average cost of capital (WACC) or your personal required rate of return. This represents the opportunity cost of your capital.
Q: Should I include taxes in cash flows?
A: Yes — always use after-tax cash flows for accurate NPV calculations.
A: Yes — always use after-tax cash flows for accurate NPV calculations.
Q: Can I compare projects with different NPVs?
A: Yes, but also consider project size. Use Profitability Index (NPV / Initial Investment) for scale comparison.
A: Yes, but also consider project size. Use Profitability Index (NPV / Initial Investment) for scale comparison.
Q: Does NPV include inflation?
A: Only if you include it in cash flows and discount rate. Be consistent: nominal with nominal, real with real.
A: Only if you include it in cash flows and discount rate. Be consistent: nominal with nominal, real with real.
Q: Is NPV better than IRR?
A: Yes — NPV accounts for project scale and handles non-conventional cash flows better than IRR. It’s the gold standard for investment decisions.
A: Yes — NPV accounts for project scale and handles non-conventional cash flows better than IRR. It’s the gold standard for investment decisions.