NPV calculator

How to calculate it

NPV = −initial investment + Σ cash flow[t] / (1 + r)^t

Discount each later cash flow back to today, then subtract the initial investment. The first cash flow after the initial investment occurs at the end of period 1. A positive NPV means these cash flows exceed the return required by the discount rate; a negative NPV means they fall short.

Reference: Microsoft: NPV timing and initial investment.

Worked example

An initial investment of 10,000 returns 3,000, 4,000, and 5,000 over three periods. At a 10% discount rate per period, the inflows have a present value of 9,789.63 and NPV is −210.37. The undiscounted gain is 2,000, but that does not cover the selected required return.

Assumptions and limits

• Enter the initial investment as a positive amount. It is subtracted at time 0, before any discounting. Later inflows are positive and later outflows are negative.
• Cash flows are equally spaced and occur at period end. Use a yearly discount rate for annual flows or a monthly rate for monthly flows. Enter 0 for a period with no cash flow so its timing is preserved.
• This is periodic NPV. It does not use actual dates; irregularly dated cash flows need XNPV. The discount rate must be greater than −100% per period.

Results use unrounded inputs and normally display two decimal places. Very small or large numbers may use scientific notation. Use consistent currency units; no currency conversion is applied.

Common questions