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Finance Calc Kit
Investments

Net Present Value Calculator

Calculate the net present value (NPV) of a series of future cash flows with different discount rates, compounding frequencies, and cash flow timing options.

Discount settings

%
Common rates:

Cash flow stream

PeriodCash flow
$
$
$
$
$
$

Net present value (NPV)

-$10,460.66

Negative NPV suggests the project destroys value at this discount rate

Total inflow

$250,000.00

Sum of non-negative cash flows

Total outflow

$200,000.00

Sum of negative cash flows (absolute value)

Cash flow detail

PeriodCash flowDiscount factorPresent value
0-$200,000.001.000000-$200,000.00
1$50,000.000.909091$45,454.55
2$50,000.000.826446$41,322.31
3$50,000.000.751315$37,565.74
4$50,000.000.683013$34,150.67
5$50,000.000.620921$31,046.07
Total$50,000.00-$10,460.66
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What net present value tells you

Net present value (NPV) discounts each future cash flow to today's dollars and sums them. A positive NPV means the project earns more than your required return; a negative NPV means it falls short. NPV is the dollar-value counterpart to percentage-based measures like IRR.

Use this calculator for capital budgeting, lease-vs-buy decisions, and investment screening. For irregular inflow schedules without an initial outlay, the present value of cash flows calculator discounts each line independently. Pair results with the IRR calculator to see the internal rate of return that sets NPV to zero, the payback period calculator to measure how quickly capital is recovered, the profitability index calculator to express value created per dollar invested, or the modified IRR calculator when reinvestment assumptions matter. When a cash flow stream continues indefinitely, the perpetuity calculator discounts constant or growing payments into a single present value.

NPV formula with compounding and timing

NPV=∑tCFt(1+rm)t⋅m\mathrm{NPV} = \sum_{t} \frac{\mathrm{CF}_t}{\left(1 + \frac{r}{m}\right)^{t \cdot m}}

Where CFt is the cash flow at period t, r is the annual discount rate as a decimal, and m is compounding frequency per year (1 annual, 2 semi-annual, 4 quarterly, 12 monthly, 365 daily). When cash flows occur at the beginning of a period, the exponent for period t > 0 is reduced by one compounding interval.

Worked example

At a 10% annual discount rate with annual compounding and end-of-period timing, an initial outflow of $200,000 (period 0) plus five inflows of $50,000 (periods 1 through 5) produces an NPV of approximately negative $10,461. The project does not clear a 10% hurdle rate despite $250,000 of gross inflows over five years.

Frequently asked questions

What discount rate should I use?
Use your weighted average cost of capital (WACC), a project-specific hurdle rate, or an opportunity cost that reflects the risk of the cash flows. Higher risk projects warrant a higher discount rate.
How does compounding frequency affect NPV?
More frequent compounding increases the effective discount rate for the same nominal annual rate, which lowers present values of future cash flows. Select the frequency that matches how often the rate is quoted or compounded in your analysis.
What is the difference between beginning and end timing?
End-of-period assumes cash flows arrive at each period end. Beginning-of-period assumes they arrive at the start, so each future flow is discounted one fewer interval. Annuities due use beginning timing.
Can NPV and IRR disagree on project ranking?
Yes, especially with non-conventional cash flows or mutually exclusive projects of different scale. NPV measures absolute dollar value added; IRR measures percentage return. When they conflict, NPV is generally preferred for wealth maximization.
Should period 0 cash flows be discounted?
Period 0 represents today, so its present value equals the cash flow itself with a discount factor of 1. Initial investment outflows are typically entered at period 0.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.