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.
Formula shown below · Tested against worked examplesHow we verify
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
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.
Compare scenariosTry three values of one input
| Upfront investment | |||
|---|---|---|---|
| Net present value | $2,978 | $1,978−$1,000 | $978−$2,000 |
| Upfront investment | $9,000 | $10,000+$1,000 | $11,000+$2,000 |
| Decision | $2,978 | $1,978−$1,000 | $978−$2,000 |
Every other input stays at the value you set above — currently $10,000 for upfront investment. Differences are measured against the first column.
Saved scenariosSave this calculation
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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.
Formula
NPV = Σ CFₜ ÷ (1 + r)ᵗ − C₀
t=1..n- CFₜ
- Cash flow in period t
- r
- Discount rate per period, as a decimal
- n
- Number of periods
- C₀
- Initial investment, paid today
A positive NPV means the project beats the discount rate you chose. The rate is a judgement about opportunity cost rather than a market quote, and the result is more sensitive to it than to any cash-flow estimate.
What this assumes
- The discount rate you enter, which is a judgement about opportunity cost rather than a market quote.
- Cash flows arrive exactly as scheduled, with no allowance for uncertainty beyond what the rate embeds.
- It ignores anything not expressed as a cash flow — strategic value, optionality, risk of ruin.
What changes this number
- Discount rate
- The most sensitive input by far. Small changes flip long-dated projects between accept and reject.
- Timing
- Later cash flows are discounted harder, which is why front-loaded projects look better.
- Terminal value
- Where present, it often dominates the result and rests on the shakiest assumption.
A worked example
Take the $10k → $3k/yr for 5 yrs at 8% scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.
What you enter
- Upfront investment
- $10,000
- Annual cash flow
- $3,000
- Number of years
- 5 years
- Discount rate
- 8%
What it returns
- Net present value
- $1,978
- Present value of cash flows
- $11,978
- Upfront investment
- $10,000
- Decision
- $1,978
Sources
This calculator uses no external data — the result follows entirely from the formula above and the values you enter, so there is nothing to cite beyond the arithmetic.
Calculator last reviewed August 9, 2026. How we verify
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.