Results
Total Cash Inflow: –
Net Present Value (NPV): –
Overview
The Net Present Value (NPV) Calculator helps you evaluate the profitability of an investment by calculating the present value of future cash flows, discounted at a specific rate, and subtracting the initial investment. It supports various currencies and flexible input of cash inflows per period.
Whether you're a startup founder, financial analyst, investor, or business student, this tool allows you to quickly assess project viability or compare multiple investment options using clear financial principles.
Formula & Methodology
The Net Present Value (NPV) is calculated using the formula:
NPV = ∑(Rt / (1 + r)^t) − C₀Where:
- Rt: Cash inflow at time t
- r: Discount rate per period
- t: Time period (year or month)
- C₀: Initial investment
The calculator supports yearly and monthly compounding. Discounting future cash flows helps you reflect the time value of money—essential in investment decisions.
Examples
- Example 1: Initial Investment = $1,000
Discount Rate = 10% annually
Cash Inflows = [$300, $400, $500]
➤ NPV ≈ $57.85 - Example 2: €2,000 investment, monthly discount rate of 1%, monthly inflows = [€300, €250, €400]
➤ NPV ≈ €826.04
Use Cases
- Comparing two or more investment opportunities
- Assessing startup profitability and break-even
- Discounting future project revenues
- Learning business valuation in academic settings
- Supporting business loan or venture capital proposals
Tips for Best Results
- Use consistent time units (all monthly or all yearly)
- Higher discount rates result in lower NPVs—use realistic assumptions
- Use zero or negative cash inflows for losses or costs in later periods
- If NPV is positive, the investment is likely profitable
- Compare NPV with IRR or payback period for a more complete picture
FAQ
What is a good NPV?
A positive NPV indicates that the project is likely to generate more value than it costs. The higher the NPV, the more profitable the investment.
Should I use yearly or monthly time units?
Use whichever matches your project timeline. Just make sure the discount rate and cash flows are aligned (e.g., don't mix monthly cash flows with annual discount rates).
Can NPV be negative?
Yes. A negative NPV suggests the investment may lose money and might not be worth pursuing.
How many cash flow rows can I add?
There’s no strict limit—add as many periods as you need to reflect your cash inflows accurately.