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Net Present Value Calculator

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Your Results

With a discount rate of 8%, the net present value is $5,208.45. On these numbers, the project earns more than 8% a year. You'd receive $19,500.00 in total, worth $15,208.45 today, so waiting for the money costs $4,291.55. The internal rate of return is 24.16%. The investment is paid back in today's dollars after about 3.5 years.

$5,208.45
Net present value at 8%
$15,208.45
Present Value of Cash Flows
1.52
Profitability Index
24.16%
Internal Rate of Return
3.5 years
Discounted Payback

How the NPV builds up

  • Cash flow
  • Present value
  • Running NPV

NPV at different discount rates

  • NPV
  • IRR
  • Your discount rate

Go further with these numbers: Internal Rate of Return, Discounted Payback or, to compare with another project, Crossover Rate.

Cash Flow Table
YearCash FlowFactorPresent ValueRunning NPV
Today-$10,000.00-$10,0001.0000-$10,000.00-$10,000-$10,000.00-$10,000
1$3,000.00$3,0000.9259$2,777.78$2,778-$7,222.22-$7,222
2$3,000.00$3,0000.8573$2,572.02$2,572-$4,650.21-$4,650
3$4,000.00$4,0000.7938$3,175.33$3,175-$1,474.88-$1,475
4$4,000.00$4,0000.7350$2,940.12$2,940$1,465.24$1,465
5$5,500.00$5,5000.6806$3,743.21$3,743$5,208.45$5,208
Total$9,500.00$9,500–$5,208.45$5,208–

Each cash flow × its factor = its present value. The factor is 1 ÷ (1 + 8%)years from today.

What Is Net Present Value?

Net present value (NPV) tells you what a project is worth in today's dollars. A dollar next year is worth less than a dollar today, because today's dollar could be earning a return. NPV shrinks each future cash flow to what it's worth now, adds them up, and subtracts what you pay at the start.

  • Positive NPV: the project earns more than your discount rate.
  • Zero NPV: it earns exactly your discount rate.
  • Negative NPV: it earns less than your discount rate. It may still make money, just less than the alternative.

How to choose a discount rate

Use the yearly return you could earn elsewhere at similar risk, or what your funding costs. A higher rate lowers the NPV, so riskier projects usually get higher rates. It's an estimate, and so are the cash flows, so try a few values. The second chart shows the NPV at every rate.

Which calculator should I use?

How to Calculate Net Present Value

Discount every cash flow to today and add them up:

NPV= ∑t=0n Ct(1+r)t
  • Ct: the cash flow t years from today. Today's is the investment, as a negative number.
  • r: the discount rate per year, as a decimal.
  • n: the number of years.

Example

A $10,000 investment at 8%, with $3,000 a year for 2 years, $4,000 a year for 3 years, and a $1,500 sale at the end of year 5:

  • Year 1: $3,000.00 ÷ 1.081 = $2,777.78
  • Year 2: $3,000.00 ÷ 1.082 = $2,572.02
  • Year 3: $4,000.00 ÷ 1.083 = $3,175.33
  • Year 4: $4,000.00 ÷ 1.084 = $2,940.12
  • Year 5: $5,500.00 ÷ 1.085 = $3,743.21
  • The present values add up to $15,208.45. Subtract the $10,000 investment: NPV = $5,208.45.

If cash arrives at the start of each year

Each year's cash arrives a year sooner, so it's discounted less. Year 1's cash arrives today, year 2's a year from now, and so on. The final value still arrives at the end of the last year. For this example, the NPV rises to $6,343.46.

How to Use the Net Present Value Calculator

"If I invest $10,000 and get $3,000 a year for 2 years, $4,000 a year for 3 years, and $1,500 from a sale at the end, is it worth it at an 8% return?" This calculator answers that.

Let's enter the numbers for this example in each box. They are already filled in when the calculator opens, so you can follow along and then change any box to match your own project.

  • Initial Investment: Enter 10,000, which is what you pay today. Enter a positive number; the calculator treats it as money going out. It can be 0.
  • Discount Rate: Enter 8, which is the yearly return you could earn elsewhere. It must be from 0 to 99.99.
  • Cash Flows Arrive At: Choose End of each year, which is when each year's cash arrives. Choose Start of each year for payments like rent received in advance.
  • Cash Flows: Choose 2, which is how many different yearly amounts the project has, from 1 to 20. If the cash is the same every year, choose 1.
  • Cash Flow 1 per Year: Enter 3,000, which is the cash you receive each year at first. A negative number means the project costs you money that year.
  • Cash Flow 1 Lasts: Enter 2, which is how many years in a row you receive that amount, so 30 equal years take just one cash flow.
  • Cash Flow 2 per Year: Enter 4,000, which is the cash each year after that.
  • Cash Flow 2 Lasts: Enter 3, which covers years 3 to 5, because each cash flow starts the year after the one before it ends. All cash flows together can last up to 100 years.
  • Final Value: Enter 1,500, which is a one-off amount at the end of the last year, such as selling equipment. Enter 0 if there's none, or a negative number for a closing cost.

Calculate and Reset

Click Calculate to see your results. If a box has a problem, such as a rate of 100, a message pops up under that box instead. With the default numbers you get:

  • Your Results: a short summary in words: the NPV ($5,208.45), how it compares with your discount rate, what waiting for the money costs, and the payback.
  • Net Present Value: the headline number.
  • Present Value of Cash Flows: $15,208.45, what the money you'd receive is worth today.
  • Profitability Index: 1.52, the present value earned for each $1 invested. Above 1.00 means a positive NPV, which helps when comparing projects of different sizes.
  • Internal Rate of Return: 24.16%, the discount rate at which the NPV would be zero.
  • Discounted Payback: 3.5 years, when the running NPV reaches $0, assuming even cash within each year.
  • How the NPV builds up: each year's cash next to its present value, with the running NPV as a line. The gap between the bars shows what waiting costs, and the line crossing $0 is the payback.
  • NPV at different discount rates: shows how much your answer depends on the rate, with dots at the IRR and your rate. Links below it open the IRR, Discounted Payback and Crossover Rate calculators with your numbers filled in, for projects of up to 12 years with end-of-year cash flows.
  • Cash Flow Table: each year's cash flow, discount factor, present value and running NPV. Download Excel saves it with the formulas, so you can change the rate and see everything update.
  • Share Results: a link that opens this calculator with your numbers filled in. Copy it, or share it on Facebook or X.

Amounts of $1 million or more are shortened, for example $1.25M. Click Reset to put every box back to its default and show the default results again.

Results depend on your estimates and don't include taxes or inflation unless you build them into your numbers. This is for information only, not financial advice.