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NPV Calculator
Decide whether an investment is worth it. Enter the upfront cost, a discount rate and each year's expected cash flow, then press Calculate to see the net present value, IRR and payback period.
Written by TopicDrill Editorial Team·Updated June 2026
Cumulative discounted cash flow
Cumulative NPV Break-even
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How the NPV calculator works
Net present value turns a project into a single number you can act on. Each future cash flow is divided by one plus the discount rate raised to the number of years away, which pulls it back to today's value. The tool sums those discounted inflows and subtracts the initial investment to tell you whether the project creates or destroys value.
The chart traces the cumulative discounted cash flow year by year. It starts deep in negative territory at the upfront cost, climbs as each discounted inflow lands, and the point where it crosses zero is your discounted payback period.
A quick example
Suppose a project costs 100,000 dollars and returns 30,000, 35,000, 40,000, 45,000 and 50,000 over five years. Discounted at 10 percent, those inflows are worth about 147,000 today, so the NPV is roughly 47,000 dollars positive and the profitability index is near 1.47, meaning you create about 1.47 dollars of value for every dollar invested.
Things to keep in mind
The result is only as good as your cash flow estimates and discount rate, so test a few scenarios before committing. For the textbook definition and its limits, see Investopedia on NPV. To project a single growing balance instead of a cash flow series, use our future value calculator.
Frequently asked questions
What is net present value?
Net present value is the worth in today's money of a project's future cash flows minus its upfront cost. It recognises that a dollar received next year is worth less than a dollar today, so each future inflow is discounted before being added up.
What does a positive or negative NPV mean?
A positive NPV means the project is expected to earn more than your required return, so it adds value and is generally worth pursuing. A negative NPV means the discounted inflows fall short of the investment, so the project destroys value at the chosen discount rate.
What discount rate should I use?
Use the return you could earn on an investment of similar risk, often your cost of capital or a hurdle rate. A higher discount rate shrinks the value of distant cash flows and lowers the NPV, so the rate you pick strongly shapes the result.
How does NPV relate to IRR?
The internal rate of return is the discount rate that makes the NPV exactly zero. If the IRR is above your discount rate the NPV is positive, and if it is below, the NPV is negative. This calculator reports both so you can cross-check the decision.
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