Net Present Value Calculator

About this calculator

Net Present Value (NPV) discounts a series of future cash flows back to today's value and subtracts the initial investment, using the formula NPV = −Initial Investment + Σ [CFₜ / (1 + r)ᵗ] for each period t, where r is the discount rate. A positive NPV means the projected cash flows are worth more today than the cost of the investment; a negative NPV means the opposite, once the time value of money and the chosen discount rate are accounted for.

Corporate finance analysts and investors use NPV as the core test in capital budgeting — comparing competing projects, deciding whether to greenlight an expansion, or valuing whether a purchase price is justified by the cash flows it's expected to generate — precisely because it accounts for the fact that a dollar received years from now is worth less than a dollar in hand today.