Net Present Value Calculator

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project. It represents the difference between the present value of cash inflows and the present value of cash outflows over time.

To effectively utilize our calculator, input the initial investment as a positive figure, specify the discount rate as a decimal number (10.5% would be entered as 10.5), and indicate the number of years for cash flow projections. Enter the anticipated future cash flows, which can be either positive (inflows) or negative (outflows). It is crucial to provide an accurate discount rate, equivalent to the weighted average cost of capital specific to your investment. If no discount rate is supplied, the calculator defaults to 10%, approximating the annualized return from the S&P500 over the past 65 years.

The outcome is a single, easily interpretable metric: the Net Present Value. A positive NPV signifies that the investment is expected to enhance the overall value of your initial investment, while a negative NPV suggests caution, indicating that the investment may not be financially viable. Your output will also be accompanied by a line graph detailing the change in NPV over the life of the expected cash flows.

Utilize this calculator in conjunction with our other free financial calculators to get a full understanding of your prospective business investments and strategies.