Net Present Value (NPV) is a core concept in finance that translates the value of future cash
flows into today's dollars. It helps you answer the question: "Is the future profit from
this investment worth more than what I'm paying for it today?"
How to Use This Tool
Discount Rate: This is your required rate of return or the interest
rate you could earn on an alternative investment (e.g., 10%).
Initial Investment: Enter the total upfront cost of the project as a
positive number.
Cash Flows: Enter the expected income for each year.
Interpreting the Result
Positive NPV (> 0): The investment is expected to be profitable and
should be accepted.
Negative NPV (< 0): The investment is expected to result in a net loss
and should be rejected.
Zero NPV (= 0): The investment will earn a return exactly equal to the
discount rate.
While NPV gives an absolute value, the IRR
Calculator provides a percentage rate of return. Many analysts use both. Learn more
in our guide: IRR vs. NPV.