NPV Calculator
Discount an entire cash-flow series back to today's money. Enter what you pay up front, list what comes back year by year, and see the net present value, profitability index, and discounted payback — with a full schedule you can export or share.
The investment
Cash flows by year
How to use this calculator
1. Put in what it costs to start
The initial outlay is everything you spend before the project produces anything — the purchase price, installation, the first ad buy, the down payment plus closing costs. Type it as a positive number; the calculator books it at year 0 as a negative and never discounts it, because you are paying it in today's money already.
2. List the cash each year brings in
Add one row per year and give it a label you will recognise later — "software licence renewal", "sale of the building", "second-year savings". Use net cash, not accounting profit: what actually lands in or leaves the bank account. A year that costs more than it returns goes in as a negative amount, and rows can be added or removed at any point.
3. Set the rate that reflects your risk
The discount rate is the return you would demand elsewhere for the same risk. Nudge it with the slider and watch the NPV move — a project that only clears the bar at 6% but drowns at 10% is telling you something about how thin the margin is.
4. Read the verdict, then stress-test it
A positive NPV means the cash flows more than cover the cost of the money. Before you act on it, open the schedule tab to see which years carry the result, and check where the NPV-versus-rate curve crosses zero — that crossing point is the return the project actually earns.
Net present value FAQs
What is net present value?
Net present value is what a stream of future cash is worth in today's money, after charging it for the time you have to wait. Every cash flow is divided by (1 + r)t, where t is the year number, and the discounted amounts are added up — including the year-0 outlay as a negative. A positive NPV means the project is expected to beat the return you demanded.
How do I pick a discount rate?
Use the return you would get from the next best use of the same money. A company usually plugs in its weighted average cost of capital; an individual might use a loan rate or an expected market return. Riskier projects deserve a higher rate. Because the answer moves a lot with this one number, test a range with the slider rather than trusting a single figure.
What does the profitability index tell me?
The profitability index is the present value of the future cash flows divided by the initial outlay. Above 1.0 means the same thing as a positive NPV, but expressed per dollar invested. It earns its keep when you are ranking several projects and cannot fund them all, because it rewards the ones that squeeze more value out of a limited budget. Note that a later year with negative cash pulls the present value down, so the index reflects the whole series rather than only the good years.
What is the discounted payback period?
It is the point where the running total of discounted cash flow first climbs back above zero, so the outlay has been recovered in present-value terms. This calculator interpolates inside the crossing year, assuming cash arrives evenly through it, which is why you see a figure like 4.02 years rather than a whole number. Simple payback ignores discounting entirely, so it is always the shorter — and always the more flattering — of the two.
Does a positive NPV always mean go ahead?
No. NPV is only as good as the cash-flow forecast and the discount rate feeding it, and it assumes the money is available and the decision can be made now. Check how far the NPV falls when you raise the rate or trim the later years. If a small change flips the sign, the project is not really a clear yes — it is a coin toss dressed up in decimal places.