NPV Calculator
Finance & InvestmentCalculate the Net Present Value of an investment with uneven cash flows over multiple periods. Enter your initial investment, discount rate, and cash flows to see NPV instantly.
Initial Investment
$
Discount Rate
%
Cash Flows by Period
Year 1
$
Year 2
$
Year 3
$
Year 4
$
Year 5
$
Cash flow vs present value, by period
Cash flow 150.00KPresent value 113.72K
Positive NPV at a 10% discount rate — the investment is expected to add value.
Net Present Value
$0
Initial Investment
-$100,000
Total Cash Flow
$0
PV of Cash Flows
$0
Periods
5
Positive NPV — the investment is expected to add value at this discount rate.
What is a NPV?
An NPV Calculator computes the Net Present Value of an investment or project by discounting a series of future cash flows back to today's value and subtracting the upfront cost. Unlike a simple lump-sum discounting tool such as the Present Value Calculator, which handles one future amount, NPV is built specifically for uneven cash flows — the realistic case where a business or project generates different amounts of cash in different years, not a single predictable payment.
NPV is the backbone of capital budgeting and investment appraisal. It captures the core idea that a dollar today is worth more than a dollar a year from now, because today's dollar can be invested and grow. By discounting every future cash flow back to a common point in time — today — NPV lets you compare projects with very different cash flow timing on equal footing, and decide whether the investment is expected to create or destroy value at your chosen discount rate.
This calculator lets you enter an initial investment, a discount rate, and an unlimited number of yearly cash flows, then computes NPV instantly. If you're also evaluating a single future payout rather than a multi-year cash flow series, the Future Value Calculator handles that simpler case.
How to use this NPV calculator
- Enter your Initial Investment — the upfront cost required to start the project, treated as a cash outflow at time zero.
- Set the Discount Rate — your required rate of return or cost of capital, reflecting the risk and opportunity cost of the investment.
- Enter the expected cash flow for Year 1 in the cash flow list — this can be any amount, including zero.
- Click + Add period to add additional years, entering a different cash flow amount for each year as needed to reflect uneven cash flows.
- Use the × button next to any row to remove a period if you need fewer years than currently shown.
- Review the Net Present Value result at the top — a positive value (shown in green) means the investment is expected to add value; a negative value (shown in red) means it's expected to lose value at this discount rate.
- Check the Discounted Cash Flow Schedule table to see exactly how much each year's cash flow contributes to the total present value.
Formula & Methodology
The Net Present Value formula is: NPV = Σ [ CFₜ ÷ (1 + r)ᵗ ] − Initial Investment Where: - CFₜ — the cash flow received in period t (t = 1, 2, 3, … up to the last period entered) - r — the discount rate per period, expressed as a decimal - Initial Investment — the upfront cash outflow at t = 0, entered as a positive number and subtracted at the end Worked example: Suppose you invest $100,000 upfront and expect cash flows of $30,000 per year for 5 years, with a discount rate of 10%. The present value of each year's cash flow is: Year 1 = 30,000 ÷ 1.10 = $27,273; Year 2 = 30,000 ÷ 1.10² = $24,793; Year 3 = 30,000 ÷ 1.10³ = $22,539; Year 4 = 30,000 ÷ 1.10⁴ = $20,490; Year 5 = 30,000 ÷ 1.10⁵ = $18,628. Summing these gives a total present value of approximately $113,723. Subtracting the $100,000 initial investment gives an NPV of roughly $13,723 — a positive result indicating the investment is expected to create value at a 10% discount rate.
Frequently Asked Questions
Net Present Value is the sum of all future cash flows from an investment, each discounted back to today's value, minus the initial investment required to start it. It tells you whether a project or investment is expected to create value (positive NPV) or destroy value (negative NPV) once you account for the time value of money. NPV is one of the most widely used metrics in capital budgeting because it converts cash flows received at different points in time into one comparable, present-day number.
NPV equals the sum of each period's cash flow divided by (1 plus the discount rate) raised to the power of the period number, minus the initial investment. In symbols: NPV = Σ [CFₜ ÷ (1+r)ᵗ] − Initial Investment, where CFₜ is the cash flow in period t and r is the discount rate. This NPV Calculator applies that formula across every period you enter, even when the cash flows are different amounts each year.
The [Present Value Calculator](/present-value-calculator/) discounts a single future lump sum back to today's value — useful when you know one specific future amount. This NPV Calculator instead handles a whole series of uneven cash flows across multiple periods, each discounted separately, and then nets out an upfront investment. Use NPV when you're evaluating a project or investment with recurring, possibly varying, cash inflows rather than one single future payment.
A positive NPV means the discounted value of the future cash flows exceeds the initial investment, so the investment is expected to generate more value than it costs at the chosen discount rate. In capital budgeting, a positive NPV is generally treated as a signal to proceed with the investment, all else being equal. The larger the positive NPV, the more value the investment is expected to add relative to its cost.
A negative NPV means the discounted future cash flows are worth less than the initial investment, so the project is expected to lose value at the chosen discount rate. This doesn't necessarily mean the project has no merit — it may still make sense at a lower discount rate or under different cash flow assumptions — but at the rate used, it does not clear the bar for value creation. Investors and businesses generally avoid or reject projects with a negative NPV unless there are non-financial reasons to proceed.
NPV gives you a dollar amount representing the value created or destroyed by an investment at a chosen discount rate, while the Internal Rate of Return (IRR) gives you the discount rate at which NPV would equal exactly zero. NPV is generally considered more reliable for comparing projects of different sizes because it shows actual value in dollars, whereas IRR can sometimes rank smaller projects unfairly higher due to its percentage-based nature. Many analysts use both metrics together — NPV for the magnitude of value, IRR for a rate-of-return comparison.
The discount rate should reflect the return you could reasonably expect from an alternative investment of similar risk, often called the cost of capital or required rate of return. A higher discount rate is used for riskier cash flows, which reduces their present value more heavily, while safer, more predictable cash flows can use a lower rate. Many businesses use their weighted average cost of capital (WACC) as the discount rate for internal project evaluation.
Use the 'Add period' button to add another year of cash flow to the schedule, and the × button next to any row to remove that period. Each row represents one period's cash flow — you can enter different amounts for each year to model uneven cash flows accurately, which is the key feature that separates NPV from a simple present value calculation. The calculator recalculates NPV instantly as you adjust periods or amounts.
Yes, NPV applies to any decision involving an upfront cost and a series of future cash inflows, including buying a rental property, starting a side business, or evaluating a major personal purchase with ongoing returns. The same discounting logic used by corporate finance teams works for individuals weighing whether future expected income justifies an initial outlay today. Pairing this with a [Lumpsum Calculator](/lumpsum-calculator-india/) can help you compare a one-time investment against a project-style cash flow stream.
NPV only accounts for inflation if you build it into either the discount rate or the cash flow estimates themselves. If your cash flows are in nominal (inflation-included) terms, your discount rate should also be nominal; if your cash flows are in real (inflation-adjusted) terms, use a real discount rate instead. Mixing nominal cash flows with a real discount rate, or vice versa, produces a distorted NPV result.
When the discount rate is zero, no discounting occurs, and NPV simply becomes the sum of all cash flows minus the initial investment — essentially an undiscounted total return. This calculator handles a zero discount rate correctly by treating each period's discount factor as 1. A discount rate of zero is rarely realistic for real-world decisions since it ignores the time value of money entirely.
Because each future cash flow is divided by a growing power of (1 + discount rate), a higher discount rate shrinks the present value of cash flows further out in time more aggressively than near-term cash flows. This means two investments with identical total undiscounted cash flow can have very different NPVs if their cash flows arrive at different times, or if you change the discount rate. Try adjusting the discount rate in this calculator to see how sensitive your NPV result is to that assumption.
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