Business calculators
NPV Calculator
Discount future cash flows to today's value and compare them with the initial cost. Your inputs stay in this browser.
Live calculator
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What this calculator measures
Net present value (NPV) discounts future cash flows back to today's dollars using a chosen discount rate, then compares that total with the initial investment. A positive NPV means the discounted returns exceed the cost.
The discount rate should reflect your required return or cost of capital — a higher rate makes future cash flows worth less today.
Formula
Inputs and variables
- Initial investment
- Enter the money amount used by this formula.
- Discount rate
- Your required rate of return or cost of capital.
- Annual cash flow
- Assumed equal every year.
- Number of years
- Enter the value used by this formula.
- Terminal or resale value
- Enter the money amount used by this formula. This input is optional.
How to use the calculator
- Choose a display currency when money fields are present.
- Enter values that cover the same period, scope, and currency.
- Review the result, formula, and worked example before using the estimate in a decision.
- Change one assumption at a time to understand what drives the result.
Worked example
- 1An investment of $10,000 returns $3,000 a year for 5 years, discounted at 8%, with no terminal value.
- 2The present value of those cash flows is about $11,978, so NPV is about $11,978 - $10,000 = $1,978.
How to interpret the result
A positive NPV means the investment is expected to add value above your required return; a negative NPV means it falls short of that bar at the chosen discount rate.
Common mistakes and limits
- Picking a discount rate that does not reflect your actual cost of capital, assuming level cash flows when they are not, or comparing NPVs of projects with very different investment sizes without also checking the rate of return.
Frequently asked questions
Why does the discount rate matter so much?
A higher discount rate shrinks the present value of future cash flows faster, so the same project can show a positive NPV at a low rate and a negative NPV at a high one.
What discount rate should I use?
Commonly your cost of capital, required rate of return, or a benchmark like a hurdle rate — this varies by context and is not something this calculator can determine for you.
Is NPV the same as profit?
No. NPV accounts for the time value of money; simple profit does not discount future cash flows.