Finance
NPV Calculator
Calculate the net present value of a project. Enter the initial outlay, discount rate, and per-period cash flows to see NPV, payback, and profitability index.
Net present value details
3 of 30
One row per period (negatives allowed for additional outflows).
t = 1
t = 2
t = 3
Net present value
$243.43
Discounted inflows exceed the initial investment.
- PV of all cash flows
- $1,243.43
- Sum of cash flows (undiscounted)
- $1,500.00
- Profitability index
- 1.24
- Payback period
- 2.00 yr
- Discount factor (last period)
- 0.7513
- Per-period rate
- 10.0000%
| Period | Cash flow | Present value |
|---|---|---|
| t = 1 | $500.00 | $454.55 |
| t = 2 | $500.00 | $413.22 |
| t = 3 | $500.00 | $375.66 |
Frequently Asked Questions about the NPV Calculator
What does net present value tell me?
NPV is the dollar amount a project is expected to add (or destroy) in today money. It discounts every future cash flow back to t=0 at your chosen rate and subtracts the initial investment. Positive NPV means the project clears your required rate.
What discount rate should I use?
Use your cost of capital or your hurdle rate, whichever is higher. For a corporate project that is WACC (often 7-12% for US public companies). For personal capital decisions, use the return you could earn on your next-best alternative.
How is NPV different from IRR and payback period?
NPV gives a dollar answer at a fixed discount rate. IRR is the discount rate that drives NPV to zero. Payback is the time for cumulative cash flows to repay the initial outlay, ignoring time value. NPV is the most reliable single metric.
What is the profitability index?
Profitability index is the present value of all future cash flows divided by initial investment. Above 1.0 signals positive NPV; below 1.0 signals negative NPV. Useful for ranking projects under a capital constraint.
Can I enter negative cash flows for later periods?
Yes. Mid-project outflows (capital refurbishments, environmental remediation) go in as negative numbers in the period they occur. They are discounted by the same rate and reduce NPV.