NPV Calculator
Net present value and internal rate of return for a series of cash flows — the standard test for whether a project is worth doing.
NPV discounts every cash flow back to today and adds them up.
How the npv calculator works
NPV discounts every cash flow back to today and adds them up. A positive NPV means the project earns more than your required rate; a negative one means it does not. The decision rule is that simple, and it is the reason NPV is preferred to payback period, which ignores everything after the break-even point.
IRR is the discount rate at which NPV hits zero — the project's own rate of return. It is intuitive but has a real trap: a series whose sign changes more than once can have several IRRs, or none. When that happens this page says so rather than picking one.
Enter the initial outlay as a negative number, then each period's cash flow.
Formula: NPV = Σ CFₜ/(1+r)ᵗ; IRR is the r for which NPV = 0
Worked examples
| Inputs | Net present value | Note |
|---|---|---|
| A project costing 50,000 | $17,933.60 | positive NPV — accept |
| The same project at a 20% hurdle | -$680.30 | negative NPV — reject |
| No sign change | $5,423.87 | no IRR exists |
FAQFrequently asked questions
What is net present value?
The sum of every cash flow discounted back to today. Positive means the project beats your required rate.
What is IRR?
The discount rate at which NPV is exactly zero — the project's own rate of return.
Can a project have more than one IRR?
Yes, whenever the cash flows change sign more than once. This page tells you when that risk is present rather than quietly returning one answer.
Why prefer NPV to payback period?
Because payback ignores everything after break-even, and ignores the time value of money entirely.
What is the profitability index?
The present value of the inflows divided by the present value of the outflows. Above 1 means the same thing as a positive NPV, but it scales for comparing projects of different sizes.
Where these figures come from
- CFA Institute — Quantitative Methods: The Time Value of Money — the discounting, annuity and IRR conventions used here
- US Federal Reserve — Regulation Z (Truth in Lending), APR calculation — why APR includes fees where a nominal rate does not
- Consumer Financial Protection Bureau — the US consumer finance regulator
Last checked: September 2026. These are the standard textbook formulas; the conventions named are those of the CFA Institute curriculum and ISO 80000 usage.