Calculate the Net Present Value (NPV) of any investment or project with custom cash flows and discount rate. See investment decision guidance, profitability index, payback period, benchmark comparison, and visual charts. Pure client-side, instant results.
NPV (Net Present Value) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It is the gold standard for investment appraisal because it measures absolute value creation in today's dollars. A positive NPV means the investment adds value, a negative NPV means it destroys value, and zero NPV means it breaks even.
NPV (Net Present Value) is the sum of all discounted cash flows from an investment. It converts future cash flows into today's dollars using a discount rate, then subtracts the initial investment. A positive NPV means the project creates value; a negative NPV means it destroys value.
NPV = Σ [CF_t / (1 + r)^t], where CF_t is the cash flow at time t, r is the discount rate, and t is the time period. The initial investment (t=0) is usually negative. Each future cash flow is divided by (1 + r) raised to its period number to get its present value.
A positive NPV is good — it means the investment creates value. The larger the positive NPV, the more value is created. A negative NPV means the investment does not earn enough to cover the cost of capital. NPV = 0 means the investment exactly meets the required rate of return.
NPV tells you the absolute dollar value an investment adds at a specific discount rate. IRR tells you the percentage return rate that makes NPV zero. NPV is preferred for comparing projects of different sizes because it measures absolute wealth creation. IRR can be misleading for projects with unusual cash flow patterns or different scales.