a four-year project at 10%
- Cashflows, starting with period 0
- -100000, 30000, 35000, 40000, 45000
- Discount rate per period
- 10%
Net present value$16,986.54
arithmetic identity on the undiscounted sum
Open this exampleInvestmentreturns
NPV Calculator
Net present value of a cashflow series, with the internal rate of return and payback period alongside. A positive NPV means the project beats the rate you discounted at, and nothing more than that.
Also called: net present value calculator, discounted cashflow value.
Net present value
$16,986.54
$16,986.54 at 10%. The project clears the rate you discounted at. The same cashflows have an internal rate of return of 17.09%.
Internal rate of return
17.09%
Sum of the cashflows, undiscounted
$50,000.00
What discounting removed
$33,013.46
Payback period
2.88
What that means
The project clears the rate you discounted at.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
Cumulative present value
Hover or drag for valuesCumulative present value
Period by period
| Period | Cashflow | Discount factor | Present value |
|---|---|---|---|
| 0 | -$100,000 | 1 | -$100,000 |
| 1 | $30,000 | 0.91 | $27,273 |
| 2 | $35,000 | 0.83 | $28,926 |
| 3 | $40,000 | 0.75 | $30,053 |
| 4 | $45,000 | 0.68 | $30,736 |
Method and background
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Each cashflow is divided by one plus the rate, raised to the number of periods away it is. Money later is worth less because it could have been earning in the meantime, and the discount rate is what you assume it would have earned. The decision rule is simple and often misquoted: a positive NPV means the project beats that rate, not that it is a good idea, and the answer is only as good as the rate you chose.
NPV = sum of each cashflow divided by (1 + rate) to the power of its period- C_t
- The cashflow in period t (currency)
- r
- The discount rate per period (decimal)
- t
- Periods from today (periods)
Worked examples
Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.
worked by hand at 10%
- Cashflows, starting with period 0
- -1000, 600, 600
- Discount rate per period
- 10%
Net present value$41.32
-1000 + 600/1.1 + 600/1.21, computed independently
Open this exampleat a zero rate NPV is a plain sum
- Cashflows, starting with period 0
- -1000, 600, 600
- Discount rate per period
- 0%
Net present value$200.00
boundary: discounting at zero must be a no-op
Open this exampleMethod and limits
What it assumes
- Cashflows arrive at the end of each period, evenly spaced.
- One discount rate for the whole horizon.
What it deliberately does not model
- It says nothing about risk beyond whatever you built into the rate.
- Irregular dates need XIRR rather than this, because unequal gaps break the period exponent.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- What discount rate should I use?
- The return you could get on something of similar risk. For a company that is usually its weighted average cost of capital; for a personal decision it is closer to what the money would otherwise earn.
- Why does NPV disagree with IRR sometimes?
- They rank projects differently when the sizes or the timing differ sharply. NPV is the one to trust, because it is denominated in money rather than in a percentage that ignores scale.