NPV Calculator
Discount annual cash benefits to today and compare them with the initial investment.
Result
Net present value: $2,222.58Estimate
A positive NPV means only that the benefits you entered exceed the initial investment at the discount rate you entered. It is not a forecast-confidence score.
- Present value of future benefits
- $18,222.58Estimate
- Initial investment
- $16,000.00
- Profitability index
- 1.139Estimate
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Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the NPV Calculator
- Enter the investment paid now and the annual return you require.
- Enter one non-negative net cash benefit for each year, in time order.
- Compare the discounted value of those benefits with the initial investment.
Turning future benefits into today’s value
A unit of money received later is not equivalent to one received now when capital has a required return. NPV discounts each year-end cash benefit back by its distance from today, adds those present values, then subtracts the initial investment.
present value = Σ cash benefit in year t ÷ (1 + rate)^tNPV = present value − initial investmentThe profitability index divides the present value of benefits by the initial investment. A value above 1 and a positive NPV describe the same threshold, but NPV preserves project scale in money.
A timeline, not a promise
Rows are ordered annual periods. A benefit in the sixth row is discounted for six years even if its label is changed. Enter a net benefit after the operating costs you expect in that year.
This first version accepts an initial outlay followed by non-negative benefits. Projects with later net outflows can need more detailed capital-budgeting treatment and may also make IRR ambiguous. Tax, depreciation, inflation and financing are not added automatically.
With your numbers
- Each year-end benefit is divided by (1 + 10%) raised to its year number
- Present value of benefits = $18,222.58
- NPV = $18,222.58 − $16,000.00 = $2,222.58
Quick reference
A positive NPV means only that the benefits you entered exceed the initial investment at the discount rate you entered. It is not a forecast-confidence score.
| Example | Net present value |
|---|---|
| Six-year project at 10% | $2,222.58 |
| Three equal benefits at 8% | $308.39 |
| One-year project at 12% | $357.14 |
| Four-year project at zero rate | €6,000.00 |
| Five-year conservative project | -€8,280.32 |
| Benefits below initial cost | -€4,793.39 |
Common questions about the NPV Calculator
- What discount rate should I use?
- The calculator does not choose one. Use the return required by your own decision process and test several rates because the result can be sensitive to it.
- When does each cash benefit occur?
- At the end of its numbered year. Row order controls timing; changing a row label does not.
- Does a positive NPV mean I should invest?
- No. It means the entered benefits exceed the entered cost at the entered rate. Forecast risk, taxes, financing and alternatives still matter.