Free startup finance tool

NPV Calculator

An NPV calculator finds the net present value of an investment: the value today of its future cash flows, discounted at your required rate of return, minus the upfront cost. Enter uneven cash flows and see every discounting step, the IRR, and the profitability index.

Net present value

$1,307.29

At 10% per year

IRR

16.34%

Rate where NPV is zero

Profitability index

1.13

PV of cash flows ÷ cost

Inputs

Rate, investment, and cash flows

Discount rate (% per year)

Initial investment (year 0)

Net cash flow at the end of each year (use a minus sign for a cost)

From a spreadsheet

Paste cash flows

Paste cash flows for years 1 to 50 as a row or column of numbers. This replaces the yearly list.

NPV with steps

How this NPV was calculated

1. Formula: NPV = −C₀ + Σ CFₜ ÷ (1 + r)ᵗ, with r = 10% = 0.1
2. Substitute: NPV = -$10,000.00 + $3,000.00 ÷ 1.1¹ + $4,200.00 ÷ 1.1² + $6,800.00 ÷ 1.1³
3. Discount each year: NPV = -$10,000.00 + $2,727.27 + $3,471.07 + $5,108.94
4. Add them up: NPV = $1,307.29

Discounted cash flow by year
Year	Cash flow	Discount factor	Present value	Cumulative PV
0 (today)	-$10,000.00	1.0000	-$10,000.00	-$10,000.00
1	$3,000.00	0.9091	$2,727.27	-$7,272.73
2	$4,200.00	0.8264	$3,471.07	-$3,801.65
3	$6,800.00	0.7513	$5,108.94	$1,307.29

How to use it

Calculate NPV in four steps

Step 1

Enter the discount rate

Use your required rate of return, cost of capital, or hurdle rate. Use an annual rate for yearly cash flows.

Step 2

Enter the initial investment

Add the upfront cost paid today (year 0) as a positive number. The calculator treats it as a cash outflow.

Step 3

Add the cash flow for each year

Type the net cash flow for each year, or paste a row of numbers from a spreadsheet. Use a minus sign for years that cost money.

Step 4

Read the NPV and the steps

A positive NPV means the project earns more than your discount rate. Check the worked formula, IRR, and table to see where the value comes from.

FAQ

NPV questions

What is NPV?

Net present value (NPV) is the value today of all future cash flows from an investment, discounted at your required rate of return, minus the upfront cost. A positive NPV means the investment is expected to earn more than that rate.

What is the NPV formula?

NPV = -C0 + CF1/(1+r)^1 + CF2/(1+r)^2 + ... + CFn/(1+r)^n, where C0 is the initial investment, CFt is the net cash flow in period t, and r is the discount rate per period.

What discount rate should I use for NPV?

Use the return you could earn elsewhere at similar risk: your cost of capital, WACC, or a hurdle rate. Riskier projects such as a new startup idea usually justify a higher rate, often 15% to 30% or more.

What is the difference between NPV and IRR?

NPV gives a dollar amount of value created at a chosen discount rate. IRR is the discount rate at which NPV equals zero. If IRR is above your discount rate, NPV is positive.

Why does my NPV differ from Excel's NPV function?

Excel's =NPV() discounts the first value it is given by one full period. Enter only the future cash flows in =NPV() and subtract the initial investment separately: =NPV(rate, CF1:CFn) - C0. That matches this calculator.

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