What is Net Present Value (NPV)?

The sum of future cash flows discounted to today's value, minus the initial investment.

How is NPV calculated?

Sum of (cash flow ÷ (1+discount rate)^t) for each period, minus initial investment.

What does positive versus negative NPV mean?

Positive suggests the investment adds value; negative suggests it destroys value relative to the required return.

Net Present Value (NPV) Calculator

Work out the net present value of an investment based on its initial cost, expected yearly cash flow, and your discount rate.

Initial Investment ($)

Annual Cash Flow ($)

Discount Rate (%)

Number of Years

Net Present Value-

Total Undiscounted Cash Flow-

Decision-

About the Net Present Value (NPV) Calculator

The Net Present Value (NPV) Calculator estimates today’s value of a series of future cash flows generated by an investment, after subtracting the initial cost.

NPV is one of the most widely used tools in capital budgeting. A positive NPV suggests the investment is expected to add value, while a negative NPV suggests it may destroy value at the given discount rate.

How to Use This Calculator

Enter the initial investment (the upfront cost).
Enter the expected annual cash flow the investment will generate.
Enter your discount rate — this usually reflects your required rate of return or cost of capital.
Enter the number of years the investment will run.
Click Calculate to see the NPV.

Formula

NPV = −Initial Investment + Σ [ Cash Flow ÷ (1 + r)^t ] for each year t from 1 to n, where r is the discount rate.

Example

Investing $10,000 today for annual cash flows of $3,000 over 5 years at an 8% discount rate produces a positive NPV, meaning the investment is expected to earn more than the 8% required return.