NPV Calculator
Net present value on an uneven cash flow series — with the outlay-timing convention made explicit, because the two versions in common use disagree by a real amount, and the discount rate at which the answer flips from yes to no.
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The present value of what comes back, less what you put in. Reported here with the two things a single NPV figure hides: which timing convention produced it, and how far the discount rate would have to move before the answer flips.
Entered positive, counted as an outflow.
Per period. Your cost of capital.
| Period | Cash flow | Present value | Cumulative |
|---|---|---|---|
| Outlay | -$10,000 | -$10,000 | -$10,000 |
| Period 1 | $2,727 | -$7,273 | |
| Period 2 | $3,306 | -$3,967 | |
| Period 3 | $3,757 | -$210 | |
| Period 4 | $2,049 | $1,839 |
This is worth doing at any discount rate below 18.03%. You entered 10%, so the rate would have to rise 8.0 points before the answer changes. That margin is more useful than the NPV itself — the discount rate is an estimate, and a project that only clears it by half a point is not really a yes.
NPV across discount rates
| 0% | 5% | 10% | 15% | 20% | 25% | 30% |
|---|---|---|---|---|---|---|
| $5,000 | $3,273 | $1,839 | $636 | -$382 | -$1,251 | -$1,999 |
Same cash flows throughout — only the discount rate changes. A project can be clearly worth doing and clearly not worth doing across a range of rates that reasonable people would all call defensible, which is why the rate deserves more argument than it usually gets.
On the timing toggle: whether the outlay sits at period zero or is discounted once is a convention, not a fact, and both are in common use. At 10% it moves NPV by $909 here. If your answer disagrees with someone else's on identical inputs, this is usually why.
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The calculation
NPV = Σ cash flow at t ÷ (1 + r)^t − initial investment
One division repeated, and a subtraction at the end. Every page on this subject agrees on it.
Worked example
$10,000 out today, four periods of returns, discounted at 10%.
| Period | Cash flow | Present value | Cumulative |
|---|---|---|---|
| Outlay | −$10,000 | −$10,000 | −$10,000 |
| 1 | $3,000 | $2,727 | −$7,273 |
| 2 | $4,000 | $3,306 | −$3,967 |
| 3 | $5,000 | $3,757 | −$210 |
| 4 | $3,000 | $2,049 | $1,839 |
| NPV | $1,839 |
| Break-even rate | 18.03% |
| Profitability index | 1.18× |
| Discounted payback | 3.1 periods |
Note the undiscounted total is $5,000. Discounting removes nearly two thirds of the apparent gain, which is the entire point of doing it.
The convention that changes the answer
Whether the outlay sits at period zero or is discounted once is a choice, not a fact, and both versions are in common use.
| Outlay paid | PV of outlay | NPV |
|---|---|---|
| Today (t=0) | $10,000 | $1,839 |
| End of period 1 | $9,091 | $2,748 |
A difference of $909 on the same cash flows — 49% of the NPV — from a decision most calculators make silently and never mention. If your answer disagrees with a colleague's on identical inputs, this is almost always why.
So it is a visible toggle here rather than a hidden default.
The break-even rate matters more than the NPV
NPV answers "is this worth doing at exactly this rate". But the rate is an estimate, so the more useful question is how wrong it would have to be to change the decision.
| Discount rate | 0% | 5% | 10% | 15% | 20% | 25% | 30% |
|---|---|---|---|---|---|---|---|
| NPV | $5,000 | $3,273 | $1,839 | $636 | −$382 | −$1,251 | −$1,999 |
Same cash flows throughout. The project is clearly worth doing at 10% and clearly not at 20%, and both rates are defensible depending on who you ask.
The crossing point is 18.03% — which is also the IRR of this series, since NPV crossing zero and IRR are the same event described two ways. With a 10% cost of capital that leaves eight points of headroom, and that is the number to report. A project clearing its hurdle by half a point is not really a yes.
Where NPV stops being useful
It is only as good as the forecast. The arithmetic is exact and the inputs are guesses, which produces a confident-looking number built on an uncertain one.
It assumes a constant rate. One discount rate applied across every period, when risk usually changes as a project matures.
It ignores optionality. NPV values a project as though you must commit today and see it through. In reality you can abandon, delay or expand it as you learn — and for genuinely uncertain projects that flexibility can be worth more than the NPV itself.
How it works
- 1
Enter the outlay and what comes back
The investment today, then one figure per period. A period can be a year, a quarter or a month — the arithmetic does not care, as long as your discount rate is expressed per the same period.
- 2
Choose where the outlay sits
Paid today at period zero, or at the end of period one. Both conventions are in common use and they disagree by the discount factor on the largest number in the series. Most tools pick one silently, which is the usual reason two npv calculator results differ on identical inputs.
- 3
Read the break-even rate, not just the number
The rate at which NPV crosses zero, and how much headroom that leaves against the rate you entered. A project clearing its hurdle by half a point is not really a yes, because the hurdle was an estimate to begin with.
Frequently asked questions
- What is net present value?
- The value today of a series of future cash flows, less what you pay to get them. Money arriving later is worth less than money arriving now, so each future amount is divided by (1 + r) raised to its period number before anything is added up.
- How do you calculate NPV?
- Divide each period's cash flow by (1 + discount rate) raised to that period number, add them together, and subtract the initial investment. An npv calculator does exactly that; the whole method is one division repeated and a subtraction at the end.
- What does a positive NPV mean?
- That the project returns more than your cost of capital — it creates value rather than merely recovering it. A negative NPV does not mean the project loses money in cash terms; it means the money would do better elsewhere at the rate you specified.
- Should the initial investment be discounted?
- That depends on when it is paid, and it is the most common source of disagreement between two calculators. Paid today it sits at period zero and is not discounted at all. Paid at the end of the first period it is discounted once. At a 10% rate on a $10,000 outlay the two conventions differ by $909, which is not a rounding error.
- What discount rate should I use?
- Your weighted average cost of capital, or the return available on the next-best use of the same money. For an early-stage company it is higher than most people assume. It is also an estimate rather than a fact, which is why the break-even rate matters more than the NPV computed at any single one.
- What is the difference between NPV and IRR?
- They are the same fact viewed from two directions. NPV asks what a project is worth at a rate you choose; IRR asks what rate makes that worth zero. The break-even rate this npv calculator reports is the IRR of the same series. NPV is the better tool for choosing between projects, because it accounts for scale and IRR does not.
- What is the profitability index?
- Present value of the inflows divided by the present value of the outlay. Above 1.0 is worth doing, and it is the same decision as a positive NPV expressed as a ratio. It is useful when capital is rationed, because it ranks projects by value returned per dollar committed rather than by total value.
- What is discounted payback?
- How long until the discounted inflows repay the outlay — always longer than plain payback, because later money counts for less. On the worked example plain payback is 2.6 periods and discounted payback is 3.1. The gap is what the cost of capital costs you in time.
- Can NPV be used for monthly cash flows?
- Yes, provided the discount rate is monthly too. Converting an annual rate means compounding rather than dividing: 12% a year is 0.949% a month, not 1%. Mixing an annual rate with monthly periods is a common and quietly large error.
- Why does a net present value calculator show a range of rates?
- Because the answer depends on an input you guessed. A net present value calculator that reports one figure invites you to trust it; the same cash flows can be clearly worth doing at 8% and clearly not at 25%. Seeing where the sign changes tells you how much the conclusion actually rests on the rate.
- What are the limitations of NPV?
- It is only as good as the cash flow forecast, it assumes the discount rate is constant over the whole period, and it ignores options — the value of being able to abandon, delay or expand a project later. For genuinely uncertain projects those options can be worth more than the NPV itself.
- Do you store the numbers I enter?
- No. The calculation runs entirely in your browser. Nothing is sent to a server, nothing is logged, and there is no account.
- Why is this free, and what is Tekk?
- Tekk is a spec-driven development platform for people building software with AI coding agents. This calculator costs us nothing to run, and a project only returns anything once it ships. No signup, no run limit, no upsell inside the tool.
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