NPV calculator
Net present value (NPV) is the sum of every cash flow discounted back to today: NPV = Σ CFt ÷ (1 + r)^t, where the initial cash flow at t = 0 is not discounted. A positive NPV means the cash flows are worth more than the investment at that discount rate.
Assumptions
| Year | Schedule A cash flow ($) | Schedule B (optional, $) | Factor | PV (A) |
|---|---|---|---|---|
| 0 | — | — | 1.0000 | — |
| 1 | — | — | ||
| 2 | — | — | ||
| 3 | — | — | ||
| 4 | — | — | ||
| 5 | — | — |
Inputs
- Initial investment or payment (t = 0)
- Enter as a positive amount paid now; it is treated as a negative cash flow. Enter a negative number for money received now.
- Annual cash flows
- Cash received (positive) or paid (negative) at the end of each year.
- Annual discount rate
- Your required return per year, in percent. Must be above −100%.
- Number of years
- 1 to 30, matching annual cash flow periods.
Outputs
- NPV
- Sum of discounted cash flows.
- Discounted cash flow table
- Each year's cash flow, discount factor and present value.
- Schedule comparison
- NPV of a second payment schedule at the same rate.
How it is calculated
NPV = Σ CFt ÷ (1 + r)t for t = 0 … n
The discount factor for year t is 1 ÷ (1 + r)t. Annual cash flows use an annual rate so periods stay consistent.
Worked example (illustrative)
Illustrative only: pay $1,000 now and receive $1,100 in one year at 10%. NPV = −1,000 + 1,100 ÷ 1.10 = $0. At 8% the NPV is about $18.52.
Assumptions and limitations
- Cash flows are assumed at year end.
- A single constant discount rate is used.
- Rates of −100% or below are not supported.
- NPV does not capture risk differences unless reflected in your rate.
Questions and answers
What is net present value?
The value today of a series of future cash flows minus the cost now, using a discount rate.
Is the initial investment discounted?
No. It occurs at t = 0, so its discount factor is 1.
What discount rate should I use?
Your required return or cost of capital for a comparable risk. Advisors often use a weighted average cost of capital.
What does a negative NPV mean?
At that rate, the future cash flows do not recover the initial cost.
How is NPV different from IRR?
NPV gives a dollar value at a chosen rate; IRR is the rate at which NPV equals zero.
Can I compare two payment schedules?
Yes. Enter a second schedule; both are discounted at the same rate so the NPVs are comparable.
Sources
Content reviewed October 9, 2026 by the SourceX Partnerships Team. Results are calculated in your browser; nothing you type is stored.