NPV Calculator
Pull each future amount back to today with the discount rate, add them up, subtract the outlay. Ten million a year for five years at 10% gives an annuity factor of 3.790787, so the inflows are worth 37,907,868 today; less a 30,000,000 outlay, the NPV is 7,907,868. Scaled down to the textbook case — 1,000 a year — the present value is 3,790.79 and the NPV against a 3,000 outlay is 790.79, the same figures. A profitability index of 1.264 means 1.264 comes back for every 1 put in.
Your numbers
Net present value
7,907,868
PV of the inflows
37,907,868
Profitability index
1.264×
What it means
At a 10% discount rate the NPV is 7907868 — the inflows are worth more today than the outlay.
Formula
Net present value = Net cash a year × (1 − (1 + Discount rate ÷ 100) ^ −Years) ÷ (Discount rate ÷ 100) − Invested
This assumes the same cash every year. For a project that starts small and builds, the answer flatters it — uneven flows have to be discounted year by year and summed. The discount rate moves the result more than anything else, and WACC is the number usually put there.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Net cash a yearNet cash arriving each year; this page assumes the same amount every year. | 10,000,000 | 0 and up |
| Discount rate (%)The yearly rate used to pull a future sum back to today. | 10 | 0 ~ 50 |
| Years (yr)How many years the money stays put; compounding bites harder as this grows. | 5 | 0 ~ 50 |
| InvestedEverything you put in; include fees or the return comes out flattering. | 30,000,000 | 0 and up |
Step by step
Quick reference table
Results when only Net cash a year changes and everything else stays put.
| Net cash a year | Net present value | PV of the inflows | Profitability index (×) |
|---|---|---|---|
| 5,000,000 | -11,046,066 | 18,953,934 | 0.632 |
| 7,500,000 | -1,569,099 | 28,430,901 | 0.948 |
| 10,000,000 | 7,907,868 | 37,907,868 | 1.264 |
| 15,000,000 | 26,861,802 | 56,861,802 | 1.895 |
| 20,000,000 | 45,815,735 | 75,815,735 | 2.527 |
What each result means
| Result | At default values |
|---|---|
| Net present valueThe present value of the inflows less the outlay; above zero clears that discount rate. | 7,907,868 |
| PV of the inflowsEvery future inflow pulled back to today and added up. | 37,907,868 |
| Profitability index (×)Present value returned per 1 invested; above 1 means a positive NPV. | 1.264 |
Common mistakes
This assumes the same cash every year. For a project that starts small and builds, the answer flatters it — uneven flows have to be discounted year by year and summed. The discount rate moves the result more than anything else, and WACC is the number usually put there.
Glossary
- Net cash a year
- Net cash arriving each year; this page assumes the same amount every year.
- Discount rate
- The yearly rate used to pull a future sum back to today.
- Years
- How many years the money stays put; compounding bites harder as this grows.
- Invested
- Everything you put in; include fees or the return comes out flattering.
- Net present value
- The present value of the inflows less the outlay; above zero clears that discount rate.
- PV of the inflows
- Every future inflow pulled back to today and added up.
- Profitability index
- Present value returned per 1 invested; above 1 means a positive NPV.
Frequently asked questions
Q. How is NPV Calculator calculated?
Net present value = Net cash a year × (1 − (1 + Discount rate ÷ 100) ^ −Years) ÷ (Discount rate ÷ 100) − Invested — Pull each future amount back to today with the discount rate, add them up, subtract the outlay. Ten million a year for five years at 10% gives an annuity factor of 3.790787, so the inflows are worth 37,907,868 today; less a 30,000,000 outlay, the NPV is 7,907,868. Scaled down to the textbook case — 1,000 a year — the present value is 3,790.79 and the NPV against a 3,000 outlay is 790.79, the same figures. A profitability index of 1.264 means 1.264 comes back for every 1 put in.
Q. Can you walk through an example?
With Net cash a year 10,000,000, Discount rate 10%, Years 5yr, Invested 30,000,000, the answer is Net present value 7,907,868.
Q. What do I need to enter?
Enter Net cash a year, Discount rate, Years, Invested. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Net cash a year moves the answer to Net cash a year 5,000,000 → Net present value -11,046,066 and Net cash a year 20,000,000 → Net present value 45,815,735. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
This assumes the same cash every year. For a project that starts small and builds, the answer flatters it — uneven flows have to be discounted year by year and summed. The discount rate moves the result more than anything else, and WACC is the number usually put there.
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