Evaluate whether an investment is worthwhile by calculating its Net Present Value. Enter your initial investment, expected cash flows for each year, and discount rate to see if the NPV is positive (good investment) or negative.
Net Present Value is the cleanest single answer to the question "is this investment worth doing?" NPV takes every future cash flow from an investment, discounts each one back to today's dollars at a chosen rate, sums them up, and subtracts the upfront cost. If the result is positive, the investment creates value at your required rate of return. If negative, it destroys value. The decision rule is simple: invest when NPV > 0, reject when NPV < 0.
The discount rate is the most important input — it represents the minimum return you require to commit capital to this investment instead of the next-best alternative. For a corporate finance project, this is usually the company's weighted average cost of capital (WACC). For a personal investment, it's your opportunity cost — what you could otherwise earn on similar-risk investments. Higher discount rates make future cash flows worth less in present terms, so they make positive NPV harder to achieve.
This calculator handles a single upfront investment plus up to five years of cash flows, computing the NPV at your chosen discount rate. The math is the foundation of discounted cash flow (DCF) analysis used throughout corporate finance, real estate, private equity, and venture capital. Use it for project evaluation, real estate deal screening, business case analysis, and any decision where the timing of cash flows matters as much as their amount.
Buy a machine for $100,000. Generates $30,000/year of additional cash flow for 5 years. Discount rate 10%. PV of cash flows: $30,000 × [1 − 1.10^(-5)] / 0.10 = $113,724 NPV: $113,724 − $100,000 = $13,724 The machine creates $13,724 of present value above the 10% required return. Worth buying. (At 15% discount rate, NPV would be $530 — still marginally positive but clearly riskier.)
Buy property for $400,000 with $100,000 down + $300,000 mortgage. Net operating cash flow: $5,000/year for 5 years. Sell at end of year 5 for $480,000, paying off $270,000 remaining mortgage, netting $210,000. Cash flows: −$100,000 today, $5,000 × 4 (years 1–4), $215,000 in year 5 (operating + sale proceeds net). Discount rate: 8% (reasonable for leveraged real estate). NPV computed: about $84,000 positive. Notice that the year 5 terminal value drives most of the result. Real estate analysis is highly sensitive to the assumed exit price.
Initial investment $200,000. Cash flows: $50,000, $60,000, $70,000, $50,000, $30,000 over 5 years. At 8% discount rate: NPV = $19,400 — positive, invest. At 12% discount rate: NPV = $3,140 — barely positive. At 15% discount rate: NPV = -$7,200 — negative, reject. The project's viability depends entirely on the discount rate used. If your company's WACC is 10%, this is a marginal "yes." If 15%, it's a clear "no." This is why the discount rate choice matters as much as the cash flow projections.
Use NPV for any investment decision with cash flows occurring at multiple points in time: corporate capital projects, real estate acquisitions, business buyouts, equipment purchases, venture investments, and personal investment alternatives that produce multi-year cash flows.
NPV is the gold standard of investment analysis because it directly answers the value question ("how much money does this create?") and is robust to the timing distortions that affect simpler metrics like total return or payback period. Two projects with the same total return are very different if one returns capital quickly and the other returns it slowly — NPV captures this difference correctly; total return doesn't.
Pair this with the IRR calculator (NPV's mirror — IRR is the rate that makes NPV zero, useful when you want to express return as a percentage), the present-value calculator (a simpler version handling a single future cash flow), the future-value calculator (the inverse — projecting forward), and the ROI calculator (simpler total-return measure, not time-adjusted).
For corporate finance use, the right discount rate is usually the firm's weighted average cost of capital (WACC) — the blended after-tax cost of debt and equity financing. For personal investment use, the right discount rate is the opportunity cost — what you could otherwise earn on similar-risk investments. Both choices have real economic meaning, not arbitrary picks.
A common error in personal NPV analysis: using too low a discount rate. A 3% rate makes almost everything look profitable; a 10% rate filters more harshly. If you can earn 7% in a diversified portfolio, your personal NPV rate should be at least 7%, plus a risk premium for less-diversified investments. This realistic rate often kills NPVs that would have looked attractive at the 3% rate.
Calculate return on investment including annualized returns and net gain.
Discount future money to find what it is worth today.
Calculate the future value of a lump sum or annuity.
Find out how long it takes to reach $1 million (or any target).
Calculate dividend income with DRIP reinvestment and dividend growth.
Calculate dividend yield from stock price and dividend payments.
Net Present Value
$6,862
Total Cash Flows
$75,000
PV of Cash Flows
$56,862
Decision
Accept
| Year | Cash Flow | Discount Factor | Present Value | Cumulative NPV |
|---|---|---|---|---|
| 1 | $15,000.00 | 0.909 | $13,636.36 | $-36,363.64 |
| 2 | $15,000.00 | 0.826 | $12,396.69 | $-23,966.94 |
| 3 | $15,000.00 | 0.751 | $11,269.72 | $-12,697.22 |
| 4 | $15,000.00 | 0.683 | $10,245.20 | $-2,452.02 |
| 5 | $15,000.00 | 0.621 | $9,313.82 | $6,861.80 |