Net Present Value Calculator
Calculate the Net Present Value (NPV) of a series of future cash flows to assess investment profitability.
Published by:
isCalculator Editorial Team
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How to use this tool?
How to Use the Net Present Value (NPV) Calculator
- Enter Initial Investment: Type the upfront cost (e.g.,
10000). Use a negative number if it’s an outflow, but the calculator automatically subtracts it. - Enter Discount Rate: Input the annual rate as a percentage (e.g.,
10for 10%). - Enter Cash Flows: List expected future returns as comma-separated numbers (e.g.,
3000, 4000, 5000). Order matters—first value is Year 1. - Click “Calculate NPV”: The result shows the net present value. A positive number means profit; negative means loss; zero means break-even.
- Review the breakdown: Below the result, you’ll see each cash flow’s present value calculation for clarity.
Tip: All values are in dollars. Use decimal points for cents (e.g., 1500.50). The calculator validates inputs—fix any errors shown in red.
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Frequently Asked Questions
Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It is used to analyze the profitability of an investment.
NPV is calculated by summing the present values of all future cash flows (both inflows and outflows) using a discount rate, and then subtracting the initial investment. The formula is: NPV = -Initial Investment + Σ (Cash Flow / (1 + r)^t), where r is the discount rate and t is the time period.
A positive NPV indicates that the projected earnings (in present dollars) exceed the anticipated costs (also in present dollars). Generally, an investment with a positive NPV is considered profitable and may be undertaken.
