NPV Calculator

Money in the future is worth less than money today, because today's money can be invested and grown. NPV captures this by discounting every future cash flow back to the present using your chosen rate, then subtracting the upfront cost. The discount rate represents your required return — often your cost of capital or the return on an equally risky alternative.

The further out a cash flow sits, the more it shrinks: a payment ten years away discounted at 10% is worth only about 39% of its face value today. That is why early cash flows dominate the result and why a high discount rate can flip a seemingly profitable project into a negative NPV. Raising the discount rate always lowers NPV; lowering it raises NPV.

The decision rule is simple. If NPV is greater than zero, the investment earns more than your required return and is worth doing. If NPV is below zero, you would do better putting the money into the alternative that defines your discount rate. When comparing competing projects, the one with the higher NPV creates more value, assuming the same scale and risk. Because the math is currency-agnostic, you can switch the currency at the top and read the same answer in your own.

Invest 10,000 today and receive 3,000 a year for 5 years, with a 10% discount rate. The undiscounted profit looks like 3,000 × 5 − 10,000 = 5,000. But discounting each 3,000 inflow back to today and subtracting the 10,000 outlay gives an NPV of about 1,372. The project still adds value, just far less than the headline 5,000 suggests once the time value of money is charged.

NPV is sensitive to the discount rate you choose — small changes can flip the sign, so test a range of rates rather than trusting a single figure. NPV assumes cash flows arrive at the end of each year; mid-year or irregular timing needs a more granular model. It also ignores the option to abandon or expand the project later, which real-options analysis captures. Pair NPV with IRR to see both the value created and the percentage return.