EachCalculatorNPV Calculator
Calculate Net Present Value (NPV) — the present-day value of a series of future cash flows, discounted at a given rate.
Net Present Value
-$210.37
Negative NPV — investment may not be worthwhile
How It Works
Discounting future cash flows
Each future cash flow is divided by (1 + discount rate) raised to the power of how many periods away it occurs — money received later is worth less today, and this formula quantifies exactly how much less.
Reading the result
A positive NPV means the investment is expected to earn more than the discount rate (often your cost of capital or required return) — a negative NPV means it falls short.
Example Calculation
An investment of $1,000 that returns $1,100 in one year has an NPV of exactly $0 at a 10% discount rate — it earns exactly the required return, no more, no less.
Common Mistakes
- Using the wrong first-period sign — the initial investment (period 0) should typically be entered as a negative cash flow.
- Choosing a discount rate that doesn't reflect your actual cost of capital or required rate of return, which skews the result's usefulness.
Frequently Asked Questions
- What discount rate should I use?
- Often your cost of capital, a required rate of return, or an interest rate you could otherwise earn on similar-risk investments — this is a judgment call specific to your situation.
- How is NPV related to IRR?
- IRR (Internal Rate of Return) is the discount rate at which NPV equals exactly 0 — see the IRR Calculator to solve for that rate directly from the same cash flows.