Investing
NPV Calculator
Net present value tells you whether an investment is worth it: it discounts the future cash it generates back to today's dollars and subtracts what you put in. A positive NPV means the return beats your discount rate. Enter the numbers to see it.
The net cash the investment returns each year.
Your required return or cost of capital — the hurdle the project must clear.
Net present value
$1,978
Positive — the return beats your discount rate.
- Present value of cash flows
- $11,978
- Upfront investment
- $10,000
- Decision
- $1,978
NPV > 0: the project adds value.
How this calculator works
NPV = present value of the annual cash flows (discounted at your rate) − the upfront investment. The present value of a level annual stream uses the ordinary-annuity formula over the number of years. NPV > 0 means the project clears your hurdle rate.
This assumes equal annual cash flows and end-of-year timing — real projects often have uneven flows, which shift the result. Treat it as a screen; for lumpy cash flows, discount each year individually.
Try an example
Frequently asked questions
What is net present value (NPV)?
NPV is the value today of an investment's future cash flows, discounted at a required rate of return, minus the upfront cost. It answers whether a project is worth doing: a positive NPV means the investment is expected to add value beyond your hurdle rate; a negative NPV means it isn't.
How is NPV calculated?
Each future cash flow is discounted to today by dividing it by (1 + discount rate) raised to the year it arrives, then all the present values are summed and the initial investment is subtracted. This calculator assumes level annual cash flows; the present value of that stream minus the upfront cost is the NPV.
What discount rate should I use?
Use your required rate of return or cost of capital — the return you could earn on a comparable-risk alternative. A higher discount rate is more demanding and lowers NPV; a lower rate is more lenient. For personal investments, an expected market return (say 6–8%) is a reasonable benchmark to test against.
What's the difference between NPV and IRR?
NPV gives a dollar value at a chosen discount rate; the internal rate of return (IRR) is the discount rate at which NPV equals zero — the project's implied annual return. NPV is generally preferred for decisions because it measures value added directly, while IRR can mislead when comparing projects of different sizes.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.