NPV Calculator – Net Present Value
Results are estimates based on the values you enter. Recheck your inputs and assumptions before using the output for decisions.
Calculate net present value from an initial investment, discount rate, and five yearly cash inflows.
NPV Calculator – Net Present Value
Free online NPV calculator to estimate net present value from an initial investment, discount rate, and five yearly cash inflows. This calculator is useful for investors, business owners, finance students, analysts, project managers, and anyone comparing whether a project creates value after discounting future cash flows. NPV is one of the most widely used capital-budgeting measures because it converts future money into today’s value and then compares that value with the upfront investment required.
This calculator uses an initial investment, a discount rate, and five yearly cash inflows. Initial investment means the upfront cost of the project. Discount rate means the return required to justify the investment or the rate used to discount future money back to present value. Cash flow year 1 through year 5 mean the expected inflows at the end of each year. Once those values are entered, the calculator shows net present value, present value of cash inflows, total undiscounted cash inflows, and profitability ratio. These outputs help show both the discounted decision value and the relationship between present value and the amount invested.
The formula of net present value
Present value of cash inflows = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 + CF4 / (1 + r)^4 + CF5 / (1 + r)^5
Net present value = Present value of cash inflows – Initial investment
Total undiscounted cash inflows = CF1 + CF2 + CF3 + CF4 + CF5
Profitability ratio = Present value of cash inflows / Initial investment
Here CF1 through CF5 mean the future yearly cash inflows, r means the discount rate, present value of cash inflows means the discounted value today of those future cash flows, net present value means the value created above the initial investment after discounting, and profitability ratio shows how much present-value inflow is generated for each dollar initially invested.
Solved Example
Example 1: Find NPV if the initial investment is $10,000, discount rate is 10%, and yearly cash inflows are $3,000, $3,500, $4,200, $4,500, and $4,800.
Solve: Present value of cash inflows = about $14,829.34
Net present value = 14829.34 – 10000 = $4,829.34
Total undiscounted cash inflows = $20,000
Profitability ratio = 14829.34 / 10000 = 1.4829
Example 2: Find the result if the initial investment is $25,000, discount rate is 9%, and yearly cash inflows are $7,000, $8,000, $9,000, $10,000, and $11,000.
Solve: Present value of cash inflows = about $34,338.61
Net present value = 34338.61 – 25000 = $9,338.61
Total undiscounted cash inflows = $45,000
Profitability ratio = 1.3735
Example 3: Find the result if the initial investment is $50,000, discount rate is 8%, and yearly cash inflows are $12,000, $14,000, $16,000, $18,000, and $20,000.
Solve: Present value of cash inflows = about $62,657.37
Net present value = 62657.37 – 50000 = $12,657.37
Total undiscounted cash inflows = $80,000
Profitability ratio = 1.2531
Table of NPV calculator
| Initial Investment | Discount Rate | Present Value of Inflows | NPV | Profitability Ratio |
|---|---|---|---|---|
| $10,000 | 10% | $14,829.34 | $4,829.34 | 1.4829 |
| $15,000 | 12% | $17,617.61 | $2,617.61 | 1.1745 |
| $25,000 | 9% | $34,338.61 | $9,338.61 | 1.3735 |
| $50,000 | 8% | $62,657.37 | $12,657.37 | 1.2531 |
How to use this NPV calculator
Enter the initial investment in the proper input field. After that, enter the discount rate and the yearly cash inflows for year 1 through year 5. Then click the calculate button. The calculator will show net present value, present value of cash inflows, total undiscounted cash inflows, and profitability ratio in the result box.
This calculator is useful when deciding whether a project adds value after considering the time value of money. A positive NPV usually means the project creates value above the required return, while a negative NPV usually means it falls short. Looking at the profitability ratio beside NPV also helps compare projects of different sizes, because it shows how much present-value inflow is generated relative to the initial investment.
When using the result, remember that NPV depends heavily on the quality of the cash flow forecast and the choice of discount rate. If either assumption is weak, the result can also be misleading. Even so, NPV remains one of the clearest and most trusted capital-budgeting tools for investment decisions. This calculator gives a practical estimate that supports project selection, investment review, budgeting, and finance education.