NPV calculator

How it works

NPV = Σ (cash flow ÷ (1 + rate)^year) − initial investment

Money arriving in five years is worth less than the same amount today, and the discount rate is how much less. This assumes a flat annual cash flow, which is what most small projects actually look like; a per-year grid belongs in a spreadsheet. A positive NPV means the project earns more than your discount rate demands. The payback line is undiscounted, because that is the convention — treat it as a rough second opinion, not as the answer.

This tool runs entirely in your browser. Nothing you type is sent to a server, stored or logged.

Frequently asked questions

What discount rate should I use?

Your cost of capital — what the money would otherwise cost or earn. Small businesses often use their loan rate; investors use a required return. Try two rates and see whether the decision changes.

What does a negative NPV mean?

The project does not clear the bar you set with the discount rate. It may still make money in absolute terms — it just earns less than your alternative use of the same capital.

Why is payback undiscounted?

Because that is how payback is conventionally quoted, and mixing conventions silently is worse than a stated simplification. If you need discounted payback, compare the NPV at successive year counts.

Can I model uneven cash flows?

Not here. Use the average annual flow for a first look, and move to a spreadsheet once the shape of the flows is what the decision turns on.