Logo

MonoCalc

/

NPV Calculator

Finance
Your required return, hurdle rate or cost of capital.
Display only.

Rate per period: 10.0000% per year

Period 0 = today; each later flow is received at the end of its period. Enter money you pay out as negative.

PeriodCash flowDiscount factorPresent valueCumulative PV
Today (0)1.000000−100,000.00−100,000.00
Year 10.90909127,272.73−72,727.27
Year 20.82644633,057.85−39,669.42
Year 30.75131537,565.74−2,103.68
Year 40.68301313,660.2711,556.59
Optional value at the end of the last period.

Net present value at 10% per year

11,556.59

Positive NPV
At a 10% required return this project adds 11,556.59 in today's money.

PV of inflows

111,556.59

PV of outflows

−100,000.00

Undiscounted net cash flow

40,000.00

The gap between this and the NPV is what waiting costs at your rate.

Profitability index

1.12

Above 1 means each unit invested returns more than one unit in today's money.

Discounted payback

3.15 years

Simple payback (undiscounted)

2.60 years

Break-even discount rate

NPV = 0 at 15.32% (this is the project's IRR).

Discounted cash flows

Each period's nominal cash flow next to its present value. The shrinkage from the first bar to the second is discounting.

NPV profile

Axis max

NPV at each annual discount rate. The line crosses zero at the break-even rate.

Spreadsheet check

With period 0 in cell B1 and periods 1–4 in B2:B5, the equivalent formula is =NPV(10%, B2:B5) + B1.

Putting period 0 inside NPV() discounts it by one period and gives 10,505.99 instead. Google Sheets' NPV() behaves the same way.

Cash flows on specific calendar dates? Use the SIP XIRR calculator for dated, irregular flows.

About This Tool

NPV Calculator – Is a Project Worth the Money You Put In?

Net present value (NPV) answers a simple question: after allowing for the return you could earn elsewhere, does this project or investment leave you better off? A pound, dollar or rupee received in five years is worth less than one in your hand today, because today's money could be invested in the meantime. NPV converts every future cash flow into today's money at your discount rate, adds them up and nets off what you invest. This NPV calculator does that for uneven cash flows, equal or growing streams, and up to three competing projects side by side.

The NPV formula, step by step

Each cash flow CF_t is multiplied by a discount factor DF_t = 1 ÷ (1 + r)^t, and the results are summed: NPV = Σ CF_t ÷ (1 + r)^t. Period 0 is today and is not discounted; every later flow is assumed to arrive at the end of its period. Take an investment of −100,000 that returns 30,000, 40,000, 50,000 and 20,000 over four years, discounted at 10%. The discount factors are 0.909091, 0.826446, 0.751315 and 0.683013, giving present values of 27,272.73, 33,057.85, 37,565.74 and 13,660.27. Together they are worth 111,556.59 today, so the NPV is 11,556.59. The project beats a 10% required return by that amount.

The same numbers give the secondary measures. The profitability index is the present value of the future flows divided by the investment, 111,556.59 ÷ 100,000 = 1.12. The running total of present values turns positive during year 4, so the discounted payback is about 3.15 years, compared with a simple, undiscounted payback of 2.60 years.

Choosing a discount rate

The discount rate is the return you require for taking on the project. Businesses use their cost of capital or a hurdle rate; individuals can use the return they would give up on the next best investment of similar risk. Riskier projects warrant a higher rate. Match the rate to the cash flows: if the flows include inflation, use a nominal rate; if they are in today's prices, use a real rate. For monthly or quarterly flows, the calculator converts your annual rate into a rate per period, either as an effective annual rate or as a nominal APR divided by the number of periods.

The spreadsheet off-by-one-period trap

Excel's and Google Sheets' NPV() function assumes its first value arrives one period from now. Writing =NPV(10%, B1:B5) with the investment in B1 therefore discounts everything by one extra period and returns 10,505.99 instead of 11,556.59. The fix is to keep period 0 outside the function: =NPV(10%, B2:B5) + B1. The calculator shows both values so you can reconcile a spreadsheet quickly.

Dated cash flows
This tool works on a regular grid of years, half-years, quarters or months. If your flows happen on specific calendar dates, use an XNPV or XIRR approach instead, such as the SIP XIRR calculator on this site.

Reading the NPV profile

The NPV profile plots NPV against the discount rate. It usually slopes downward: the higher the rate, the less distant cash is worth. Where the line crosses zero is the break-even rate, better known as the internal rate of return (IRR); for the example above it is 15.32%. If the cash flows change sign more than once, for example a mine that needs a large clean-up payment at the end, the line can cross zero twice, and a single IRR no longer describes the project.

NPV vs IRR when projects compete

Suppose project P returns 2,000, 3,000, 4,000 and 6,000 on a 10,000 investment, while project Q returns 7,000, 3,000, 2,000 and 1,000. Q has the higher IRR (16.69% vs 15.28%) because its money comes back sooner, but at a 10% rate P has the higher NPV (1,400.86 vs 1,028.62). Their profiles cross at 13.26%: below that rate P adds more value, above it Q does. For mutually exclusive projects, choose the one with the higher NPV at your own rate. When lives differ, the equivalent annual annuity puts projects on a per-year footing, assuming each could be repeated.

Limits of the model
NPV is only as good as its inputs. The calculator does not model taxes, depreciation, mid-year timing, risk adjustments or MIRR, and a large perpetuity terminal value can dominate the result. Test how sensitive the answer is to the rate and growth assumptions before relying on it.

Frequently Asked Questions

Is the NPV Calculator free?

Yes, NPV Calculator is totally free :)

Can I use the NPV Calculator offline?

Yes, you can install the webapp as PWA.

Is it safe to use NPV Calculator?

Yes, any data related to NPV Calculator only stored in your browser (if storage required). You can simply clear browser cache to clear all the stored data. We do not store any data on server.

What does NPV mean, and when should I accept a project?

Net present value is the sum of every cash flow discounted back to today at your required rate of return, minus what you invest. A positive NPV means the project earns more than that required return and adds value; a negative NPV means it falls short, so the usual rule is to accept positive-NPV projects and reject negative ones.

How does this NPV calculator work?

Enter an upfront outlay as a negative period-0 value and the later cash flows, pick a discount rate and period length, and the calculator discounts each flow by 1 ÷ (1 + r)^t and adds them up live. It also reports the profitability index, discounted payback, the break-even rate where NPV is zero, and can compare up to three projects on one NPV profile.

How do I choose a discount rate?

Use the return you could earn elsewhere on money of similar risk: a company's cost of capital or hurdle rate, or for personal decisions the return you give up by not investing in an alternative. Riskier projects deserve a higher rate, and the rate should match the cash flows, so use a nominal rate for nominal flows and a real rate for inflation-adjusted flows.

Why does Excel's NPV() give a different number?

Excel and Google Sheets assume the first value passed to NPV() arrives one period from now, so putting the period-0 investment inside the function discounts it by an extra period and the whole result comes out divided by (1 + r). Use =NPV(rate, period 1 to N cells) + period 0 cell instead; the calculator shows both the correct formula and the value the mistake would give.

Why can NPV and IRR rank projects differently?

IRR is the rate at which a project's NPV is zero, so it ignores your actual cost of capital and the size and timing of the flows. When two projects' NPV profiles cross, one can have the higher IRR while the other adds more value at your rate; for mutually exclusive projects, trust NPV at your own discount rate.

How much should the terminal value drive the result?

A perpetuity-growth terminal value often makes up most of the present value, which means the answer rests heavily on the growth and discount rates you assume. The calculator shows the terminal value's share of present value and the NPV without it, so if the project only works because of a large terminal value, test it with lower growth or a shorter horizon.