NPV Calculator (Net Present Value)
Discount future cash flows to today with a net present value calculation. A positive NPV means the investment clears your required rate of return (the discount rate).
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Learn moreThe NPV decision rule
Net present value discounts every future cash flow back to today using your required rate of return, then subtracts the upfront cost. The rule is simple: a positive NPV adds value and clears your hurdle rate; a negative NPV does not. NPV is the gold-standard capital-budgeting method because it accounts for the time value of money, unlike simple payback.
How it’s calculated & sources
NPV = minus initial investment plus the sum of cash flow divided by (1 + discount rate)^t, over each year t. Assumes even annual cash flows. Positive NPV = accept at your discount rate.
Benchmark: the NPV greater than or equal to 0 decision rule; the discount rate is your hurdle or weighted cost of capital.
Results update as you type and are general estimates, not personalized advice. Verify with a professional.
Worked example
A $100,000 project returning $25,000/year for 5 years discounted at 10% has a present value of about $94,770, so NPV is roughly minus $5,230 — just short of the hurdle, a reject.
Frequently asked questions
What discount rate should I use?
Your required return or weighted average cost of capital (WACC). A higher rate lowers NPV.
Positive NPV always means invest?
It means the project beats your hurdle rate. Compare competing positive-NPV projects and consider risk and capital limits.
NPV vs IRR?
IRR is the discount rate that makes NPV zero. NPV gives a dollar value; they can disagree when comparing mutually exclusive projects.