NPV Calculator
Analyze project viability by calculating Net Present Value, IRR, and payback metrics.
Set the expected cash inflow for each year below:
| Year | Cash Flow | Discount Factor | Present Value (PV) | Cumulative PV |
|---|
How to use the NPV Calculator
- Set the Initial Investment Outlay (cash outflow at Year 0).
- Adjust the Discount Rate / Hurdle Rate, which represents your required annual rate of return or borrowing costs.
- Select the Project Duration (up to 15 years). This dynamically adds or removes Year-by-Year cash flow rows.
- Specify the expected cash inflows for each year in the grid, or use the ⚡ Quick Fill controls:
- Constant: Sets the same cash flow amount for all years.
- Compound Growth: Generates growing cash flows by starting at a base value and compounding it annually.
- Reset to Zero: Clears all year inputs instantly.
- Evaluate the results: A positive NPV means the investment will generate value above the hurdle rate (viable opportunity).
What is Net Present Value (NPV)?
Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project. It represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time. By discounting future earnings back to today's currency value, NPV accounts for the time value of money.
Internal Rate of Return (IRR) is the annual growth rate that an investment is projected to generate. Mathematically, it is the specific discount rate at which the Net Present Value of all cash flows (both positive and negative) from a project equals zero.
Profitability Index (PI), also known as the value investment ratio, measures the payoff of an investment per unit of cost. A PI greater than 1.0 indicates that the investment's present value of inflows exceeds the outlay (matching a positive NPV).