Net Present Value (NPV) Calculator
Net Present Value (NPV) tells you whether a project creates value: if NPV is positive, the investment earns more than your required rate of return. Enter the upfront cost, the expected annual cash flow, the discount rate and the project life — get NPV, profitability index, payback period and a sensitivity curve showing how NPV changes as the rate varies.
% p.a.
years
NPV ≥ 0 → invest: project returns more than the required rate
- 1
Discount rate (decimal)
r = 10% ÷ 100 = 0.1 - 2
Annuity factor
[1 − (1 + 0.1)⁻ⁿ] ÷ 0.1 = 3.790787Converts equal annual cash flows to a single present-value multiplier. - 3
PV of cash flows
30,000 × 3.790787 = 113,723.6 - 4
Net Present Value
113,723.6 − 100,000 = 13,723.60
How does this calculator work?
NPV = −C₀ + CF × [1−(1+r)^−n]/r. A positive NPV means the investment earns more than the required return rate; negative means it destroys value. Enter upfront cost, annual cash flow, discount rate and years. The sensitivity curve shows where NPV = 0 (the project's IRR).
Formula
How this is calculated
A dollar received in the future is worth less than a dollar today because of the opportunity cost of waiting — you could have invested that dollar at the required rate of return r. Net Present Value converts all future cash flows to today's dollars by discounting each one: CF_t ÷ (1+r)^t. Summing those present values and subtracting the upfront investment gives NPV. A positive NPV means the project generates more value (in today's dollars) than it costs; a negative NPV means the opposite.
This calculator assumes equal (annuity) cash flows each period, so it uses the closed-form present-value-of-annuity formula: PV = CF × [1 − (1+r)^−n] / r. For a project with irregular cash flows, compute each year's discounted value separately and sum them. The discount rate should be the project's required rate of return — typically the weighted average cost of capital (WACC) for corporate investments.
The Profitability Index (PI = PV of inflows ÷ Investment) is useful when comparing projects of different sizes; a PI above 1 means value-creating. The simple payback period (Investment ÷ Annual Cash Flow) ignores the time value of money and should be used only as a quick screen. The NPV sensitivity curve shows at a glance how sensitive the decision is to the assumed discount rate, and where the curve crosses zero is the project's Internal Rate of Return (IRR).
Frequently asked questions
For corporate investment decisions, use the company's WACC (weighted average cost of capital). For personal decisions, use your required rate of return or the rate you can earn on an alternative investment of similar risk. A higher discount rate makes future cash flows worth less and reduces NPV.
NPV gives you a dollar amount of value created at a given discount rate. IRR is the discount rate that makes NPV exactly zero — it is the project's own implied rate of return. NPV is generally preferred for decision-making because it is additive (you can sum NPVs across projects) and unambiguous, whereas IRR can give multiple solutions for non-conventional cash-flow patterns.
This calculator assumes equal annual cash flows (an annuity). For unequal flows, sum each year's discounted value individually: NPV = −C₀ + CF₁/(1+r) + CF₂/(1+r)² + ⋯ + CF_n/(1+r)^n. The decision rule (invest if NPV ≥ 0) remains the same.
Also known as
TG we-Calculate Editorial Team. (2026). Net Present Value (NPV) Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/net-present-value-calculator
TG we-Calculate Editorial Team. "Net Present Value (NPV) Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/net-present-value-calculator.
TG we-Calculate Editorial Team, "Net Present Value (NPV) Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/net-present-value-calculator
@misc{wecalculate_net_present_value_calculator, title = {Net Present Value (NPV) Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/net-present-value-calculator}}, year = {2026}, note = {TG we-Calculate} }
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