NPV Calculator
Work out the net present value of an investment from the upfront cost and up to five years of cash flows at your discount rate, with the profitability index.
- Free
- No sign-up to try
- Works as you type
Net present value
Net present value (NPV)
$6,936
Present value of the cash flows
$56,936
Profitability index (present value ÷ investment)
1.14x
Cash flows minus investment, undiscounted
$22,000
- Each year's cash flow is discounted: cash flow ÷ (1 + discount rate)^year.
- Present value = the five discounted cash flows added up.
- NPV = present value − upfront investment; above zero, the investment earns more than your discount rate.
- Profitability index = present value ÷ investment.
Free, no sign-up to try. Save it as a live calculator you can share; an estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
How it works
How the NPV Calculator works
- 1
Enter your numbers
Every result updates as you type, with the formula shown under it.
- 2
Check the method
See how each number is worked out and what it assumes.
- 3
Save it as a Room
Share a live calculator: others can change the numbers and see the result update.
Worked example
What it makes
Example inputs
- Upfront investment (year 0)
- $50,000
- Discount rate
- 8 %
- Net cash flow, year 1
- $12,000
- Net cash flow, year 2
- $14,000
- Net cash flow, year 3
- $15,000
- Net cash flow, year 4
- $15,000
- Net cash flow, year 5
- $16,000
Results
- Net present value (NPV)
- $6,936
- Present value of the cash flows
- $56,936
- Profitability index (present value ÷ investment)
- 1.14x
- Cash flows minus investment, undiscounted
- $22,000
How it's calculated
- Each year's cash flow is discounted: cash flow ÷ (1 + discount rate)^year.
- Present value = the five discounted cash flows added up.
- NPV = present value − upfront investment; above zero, the investment earns more than your discount rate.
- Profitability index = present value ÷ investment.
- Assumes: Cash flows arrive at the end of each year; the investment is paid at the start (year 0).
- Assumes: The discount rate is yours to choose (your cost of capital or required return) and is the same every year.
- Assumes: Enter 0 for a year with no cash flow and a negative number for a year with a net outflow; years after year 5 are not counted.
An estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
Who it's for
Who uses it
Finance teams
Appraise a project against your cost of capital.
Founders
Compare an investment's discounted return with its cost.
Students
Check a discounted cash flow exercise step by step.
Good to know
What to consider
- The discount rate drives the answer: try a few to see how sensitive the result is.
- Cash flows are your forecasts, so the result is only as good as they are. An estimate, not financial advice.
Questions
About the NPV Calculator
What discount rate should I use?
Usually your cost of capital or the return you need to justify the risk. It's a judgement for you or your finance team; the calculator doesn't suggest one.
Can I share the calculator with my team or a client?
Yes. The Room keeps the calculator live: anyone with the link can change the numbers and see the result update, with the method and assumptions on the same page.
Make your calculator now
Free, no sign-up to try. It becomes a Room you can edit, publish and share.
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Related tools
- IRR CalculatorFind the internal rate of return of an investment that pays the same net cash flow every year, with the NPV at your hurdle rate and simple payback alongside.
- Payback Period CalculatorFind how many months an investment takes to pay for itself from the monthly gain it brings, and where you stand after a period you choose.
- ROI CalculatorWork out the return on an investment, as a net amount and a percentage, and share it as a calculator anyone can adjust.