Net Present Value Calculator

Net present value is the sum of future cash flows discounted to today's value. A positive NPV means the project beats your discount rate; a negative NPV means it loses to that rate.

Inputs

Initial investment (year 0)

Enter as positive; the calculator subtracts it.

Discount rate

Your hurdle rate, cost of capital, or required return.

Future cash flows (one per year, comma-separated)

Years 1, 2, 3, … with values in dollars. Negative values OK.

Results

NPV—

Undiscounted total—

Years modeled—

Year	Cash flow	Discount factor	PV

The NPV formula

NPV = −C₀ + Σ Cₜ / (1 + r)^t

Where C₀ is the initial outlay, Cₜ is the cash flow in year t, and r is the discount rate. The decision rule is simple: if NPV is positive, the project earns more than the discount rate and creates value; if negative, the project destroys value relative to the alternative the discount rate represents.

Choosing a discount rate

The discount rate should reflect the opportunity cost of the capital being deployed at the risk level of the cash flows being discounted. For a public company, that's typically the weighted-average cost of capital (WACC). For a private project, it's the rate the company could earn on alternatives of similar risk — often expressed as a hurdle rate. Inflating the discount rate to compensate for risky cash flows is a common shortcut; cleaner practice is to discount expected cash flows at the cost of capital and adjust for risk via scenarios.

Worked example

A factory upgrade costs $500,000 today and is expected to produce $130,000 of incremental cash flow each year for five years. At a 10% discount rate: PV of the five cash flows is $492,815, NPV is −$7,185 — barely negative. At an 8% discount rate, NPV becomes +$19,054. The same project is acceptable or rejectable based on which rate you require, which is why discount rate selection is a real strategic decision.

What NPV doesn't account for

Optionality. Standard NPV treats the project as a fixed commitment; in reality, you can often delay, expand, or abandon. Real options analysis values these flexibilities.
Strategic positioning. Cash flows might depend on whether you build the capability — e.g., a barely NPV-positive entry into a market may unlock a large NPV-positive expansion later.
Cash flow uncertainty. NPV is a single point estimate. Pair it with sensitivity analysis on the riskiest two or three inputs.
Capital structure assumptions. Using WACC implicitly assumes the project is financed at the company's existing debt-equity mix.