NPV Calculator: Net Present Value of an Investment
Net present value tells you whether an investment is worth more than it costs, once future cash is discounted back to today’s money.
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The NPV Formula
r = discount rate (your required return or cost of capital)
Example: Invest 100,000 to receive 30,000, 35,000, 40,000, 45,000 and 50,000 over five years. At a 10% discount rate the NPV is 48,033, so the project creates value.
Works in any currency — enter all amounts in the same one.
How to Read the Result
| NPV | Meaning | Decision |
|---|---|---|
| Positive | Returns more than your discount rate | Accept |
| Zero | Returns exactly your discount rate | Indifferent |
| Negative | Returns less than your discount rate | Reject |
When comparing projects, the one with the higher NPV adds more value — even if another has a higher IRR.
NPV at Different Discount Rates
The same cash flows are worth less as the discount rate rises:
| Discount rate | NPV |
|---|---|
| 6% | 66,044 |
| 8% | 56,643 |
| 10% | 48,033 |
| 12% | 40,128 |
| 15% | 29,440 |
| 20% | 14,249 |
| 25% | 1,696 |
Where the NPV crosses zero (about 25.75%) is the project’s IRR.
Choosing the Discount Rate
- For a company project, use the company’s WACC.
- For a personal investment, use the return you could earn elsewhere at similar risk.
- Riskier projects deserve a higher rate.
Popular Variations
Frequently Asked Questions
What is a good NPV?
Any positive NPV means the investment earns more than your required return. Larger is better when comparing projects of similar size.
What is the difference between NPV and IRR?
NPV gives the value created in money terms at a chosen discount rate. IRR gives the rate of return at which NPV is zero.
How do I calculate NPV in Excel?
Use =NPV(rate, year-1 to year-n cash flows) − initial investment. Excel’s NPV function assumes the first cash flow is one period away.
Can NPV be used for unequal periods?
Use XNPV for cash flows on specific dates rather than equal yearly intervals.