NPV Calculator
Calculate net present value, IRR, profitability index and discounted payback for a series of periodic cash flows against an up-front investment, with a full per-period discounting schedule.
About this calculator
Net present value answers a single question that a raw total of future cash flows can't: is this investment worth more, in today's dollars, than what you're putting into it right now? This calculator models the cash flows as a series that can grow or shrink by a fixed percentage each period, optionally adds a one-time terminal or salvage value in the final period, discounts every one of those flows back to the present at your chosen rate, and subtracts the initial outlay from the total. Alongside the headline NPV figure it also solves for the internal rate of return by bisection — the discount rate at which NPV would land exactly at zero — the profitability index, which measures value created per unit invested, and the discounted payback period, the point at which the running total of discounted cash flows first turns positive.
Because the discount rate compounds against every future period, a project's NPV is highly sensitive to that single assumption, and a rate set too low can make a mediocre project look attractive while one set too high can bury a genuinely good one. IRR can also fail to exist entirely — shown here as 'not achievable' — for a cash-flow pattern that never actually recovers its initial outlay no matter what discount rate is applied, which is an honest result, not a bug.
Financial Disclaimer
This calculator is for educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making investment or financial planning decisions.
Inputs
Summary
Net present value
$8,881.52
≈ 9 smartphones
How to Use This Calculator
- Enter the up-front investment and the cash flow you expect in the first period.
- Set how many periods the investment runs for and your required rate of return.
- Use the growth rate if the cash flows rise or fall each period rather than staying level.
- Read the NPV: above zero means the project clears your discount rate. Check IRR and discounted payback alongside it.
How the result changes with Number of periods
| Number of periods | Net present value |
|---|---|
| 3 | -$37,828.70 |
| 4.5 | -$5,230.33 |
| 9 | $43,975.60 |
| 15 | $90,151.99 |
What each input means
- Initial investment
- Cash out at period zero.
- Cash flow per period
- Net cash the investment returns in the first period.
- Cash flow growth per period
- Set above zero for flows that rise each period, below zero for a declining asset.
- Number of periods
- Usually years. Keep the discount rate on the same basis.
- Discount rate
- Your required return or cost of capital.
- Terminal / salvage value
- One-off amount received in the final period, on top of that period's cash flow.
What each result means
- Net present value
- Positive means the project beats your discount rate.
- IRR
- The discount rate at which NPV would be exactly zero.
- PV of inflows
- All future cash flows discounted to today.
- Profitability index
- PV of inflows per unit invested. Above 1.0 creates value.
- Discounted payback
- Periods until the discounted cash flows repay the outlay.
- Net, ignoring the time value of money
- Shown for contrast — the gap against NPV is what discounting costs.
How this is calculated
Formula
NPV = Σ CF_t ÷ (1 + r)^t − initial investmentWorked example, using the default values
- Discount each period's cash flowPV_t = CF_t ÷ (1 + r)^tr = 10%, 6 periods = PV of inflows = $108,881.52
- Subtract the initial outlayNPV = PV of inflows − initial investment$108,881.52 − $100,000 = $8,881.52
- Find the rate that makes NPV zeroIRR: solve NPV(r) = 0solved by bisection = 12.98%
- Compare value created per pound investedPI = PV of inflows ÷ initial investment$108,881.52 ÷ $100,000 = 1.089
Engine last updated . Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
What does it mean if the calculator reports 'no IRR exists'?
It means that across the entire range the calculator searches, there is no discount rate that makes NPV equal to zero — typically because the total cash inflows never actually recover the initial investment even before any discounting is applied. That is a genuine finding about the project's cash flows, not a computational failure, and it usually pairs with a negative NPV at every reasonable discount rate.
Why do I need both NPV and IRR if they're both measuring the same investment?
NPV expresses value in absolute dollars at your chosen discount rate, which makes it the right tool for comparing projects of different sizes on a dollar basis, while IRR expresses the same cash flows as a single percentage return that's easy to compare against a hurdle rate or another investment's expected return. They usually agree on accept-or-reject decisions but can rank competing projects differently when their sizes or timing diverge sharply.
How sensitive is NPV to the discount rate I choose?
Very — since every future cash flow gets divided by a growing power of one plus the rate, even a one or two percentage point change in the discount rate can flip a positive NPV to negative for a project with cash flows spread over many periods. Testing a range of plausible discount rates rather than trusting a single assumed number is standard practice for exactly this reason.
What does the profitability index add beyond the NPV figure?
The profitability index divides the present value of inflows by the initial investment, expressing value created per dollar committed rather than as a lump-sum dollar amount, which makes it useful for ranking multiple positive-NPV projects when capital is limited and you can't fund all of them. A profitability index above 1.0 corresponds to a positive NPV, so the two measures always agree on whether a single project clears the bar.
Does discounted payback period tell me the same thing as regular payback period?
No — a simple payback period just adds up raw cash flows until they equal the initial investment, ignoring the time value of money entirely, while discounted payback first shrinks each future flow by the discount rate before running the same test, which always takes at least as long to reach and is the more honest measure of true break-even timing.
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