NPV Calculator
Calculate Net Present Value for investment analysis. Evaluate project profitability by discounting future cash flows to present value.
Upfront cost (Year 0)
Required rate of return / WACC
Net Present Value
$48,033
Accept ProjectProfitability Index
1.48
Value creating
Present Value of Cash Flows
| Year | Cash Flow | Discount Factor | Present Value |
|---|---|---|---|
| 0 | -$100,000 | 1.0000 | -$100,000 |
| 1 | $30,000 | 0.9091 | $27,273 |
| 2 | $35,000 | 0.8264 | $28,926 |
| 3 | $40,000 | 0.7513 | $30,053 |
| 4 | $45,000 | 0.6830 | $30,736 |
| 5 | $50,000 | 0.6209 | $31,046 |
| Net Present Value | $48,033 | ||
NPV
$48.0K
PI
1.48
Payback
2.9 yrs
Simple ROI
100.0%
NPV Decision Rule:
- NPV > 0: Accept - creates shareholder value
- NPV < 0: Reject - destroys shareholder value
- NPV = 0: Indifferent - meets required return exactly
Value-Creating Investment
This project adds $48,033 in value above the 10% required return. The PI of 1.48 means you get $1.48 of value per $1 invested.
NPV vs Other Investment Metrics
NPV
Dollar value created. Best for accept/reject decisions.
IRR
Return rate where NPV=0. Good for comparing projects.
Payback Period
Time to recover investment. Ignores time value of money.
Profitability Index
Value per dollar invested. Best when capital is limited.
Frequently Asked Questions
Official References
Learn more about NPV and capital budgeting:
- CFI: Net Present Value Guide
Professional guide to NPV calculations and applications
This calculator provides estimates. Actual results depend on accuracy of cash flow projections and appropriate discount rate selection.