NPV Calculator

Calculate net present value from initial investment, cash flows, discount rate, and timing assumptions.

Last reviewed May 27, 2026 by CalcMastery Editorial Team; Reviewed by CalcMastery Finance Review Team

NPV Calculator

Compute Net Present Value from an initial investment, a discount rate, and either fixed or varying cash flows by year.

$

Upfront outlay at time 0 (enter a positive number).

Fixed Each YearVarying by Year
%

Annual discount rate in percent (e.g., 10 for 10%).

Analysis horizon in years.

$
Year
Amount

Enter inflows (+) and outflows (−) by year index starting at 1.

Scenarios
Project profiles with typical cost of capital and cash flow patterns.
Stable ProjectHigh-Growth ProjectRisky Project

Results

  • Net Present Value (NPV)$
  • PV of Inflows$
  • Initial Investment$
  • Profitability Index—
  • Decision—

Enter your inputs above to calculate the results.

Use this NPV calculator to convert a series of future cash flows into today value. Enter the initial investment, expected cash flows, discount rate, and period timing. The calculator returns net present value so you can compare projects, investments, acquisitions, and capital budgeting choices on a consistent present-value basis.

This NPV Calculator computes the Net Present Value of an investment based on its initial investment, cash flows, discount rate, and time period. It helps evaluate whether a project is financially viable by comparing the present value of expected inflows with the cost of investment.

Introduction

The calculator supports two modes: Fixed Each Year (same annual cash flow) and Varying by Year (different cash flows per year). Inputs include Initial Investment, Discount Rate (annual), Number of Years, and Cash Flow per Year (or per year list).

The standard NPV formula is:

NPV = sumt = 1n CFt / ((1 + r)t) − I0

where CFt is the cash flow in year t, r is the discount rate, and I0 is the initial investment.

Related calculators and references

How to Use the NPV Calculator

Use these steps to calculate an investment’s Net Present Value and make an informed accept-or-reject decision.

Enter the Initial Investment

Input the upfront cost or capital required (e.g., $10,000).

Select Cash Flow Mode

Choose Fixed Each Year for equal annual inflows, or Varying by Year for custom amounts.

Input Discount Rate (annual)

Provide the required rate of return or cost of capital (e.g., 10%).

Set Number of Years

Define how long the investment generates returns (e.g., 5 years).

Enter Cash Flow per Year

Type the annual cash inflow; if varying, fill each year's specific value.

Enable “Show decimals”

Toggle if you want precise decimal results.

Review Results

The tool displays Net Present Value (NPV), Present Value of Inflows, Profitability Index, and Decision (Accept/Reject). The Profitability Index (PI) is given by:

PI = PVinflows / Initial Investment

The investment is accepted if NPV > 0 or PI > 1.

Frequently Asked Questions

These FAQs explain discount rates, cash-flow timing, positive versus negative NPV, and common modeling mistakes.

What is Net Present Value (NPV)?

NPV is the difference between the present value of cash inflows and outflows over a period of time, used to assess investment profitability.

How is NPV calculated?

NPV sums each future cash flow discounted back to its present value using a specified discount rate, then subtracts the initial investment.

What does a positive or negative NPV indicate?

A positive NPV means the investment is expected to generate profit above the required return, while a negative NPV indicates a loss or subpar return.

What is the discount rate in NPV calculations?

The discount rate represents the required rate of return or cost of capital used to discount future cash flows.

What is the difference between fixed and varying cash flows?

Fixed cash flows remain constant each year, while varying cash flows differ annually, reflecting irregular income or expenses.

What is the Profitability Index (PI)?

PI equals the ratio of the present value of inflows to the initial investment. A PI above 1 indicates an acceptable project.

What happens if the discount rate is 0%?

With a 0% discount rate, future cash flows are not discounted, so NPV equals the total inflows minus the initial investment.

The NPV calculator evaluates the net benefit of an investment by discounting future cash flows to their present value and subtracting the initial investment.

Formula (fixed annual cash flows):

NPV = sumt = 1n CF / ((1 + r)t) − I0

Where:

  • NPV: Net Present Value
  • CF: Annual cash flow
  • r: Discount rate (as decimal)
  • n: Number of years
  • I0: Initial investment

Present Value of Inflows (PV):

PV = CF × (1 − (1 + r)-n) / r

Profitability Index (PI):

PI = PV / I0

Decision Rule:

  • If NPV > 0 → Accept the project
  • If NPV < 0 → Reject the project

Assumptions:

  • Cash flows occur at year-end.
  • Discount rate remains constant.
  • All values in USD; round to two decimals.

Edge Cases:

  • r = 0: No discounting.
  • n = 0: NPV not defined (no time period).
  • Negative cash flows: Represent outflows and reduce NPV.

Modes Supported:

  • Fixed Each Year
  • Varying by Year

Sources & Methodology