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NPV Calculator

Calculate net present value, IRR, and payback period to decide whether an investment is worth making.

Updated June 2026 · Editorial standards

Investment

$
%

Yearly cash flows

Year 1
$
Year 2
$
Year 3
$
Year 4
$
Year 5
$
Net present value
-$5,230
IRR
7.93%
Payback period
4.0 yrs

At a 10% discount rate, this project's NPV is -$5,230. A negative NPV means the cash flows don't cover your required return — the project destroys value at this rate.The internal rate of return is 7.93% and the undiscounted payback period is 4.0 years.

Cumulative NPV — crossing zero means break-even

Discounted cash flows

YearCash flowPresent valueCumulative NPV
0-$100,000-$100,000-$100,000
1$25,000$22,727-$77,273
2$25,000$20,661-$56,612
3$25,000$18,783-$37,829
4$25,000$17,075-$20,753
5$25,000$15,523-$5,230
By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the npv calculator (net present value)?

In short

Net present value (NPV) discounts every future cash flow back to today's dollars at your required rate of return, then subtracts the initial investment. NPV = −Investment + Σ CFₜ ÷ (1 + r)ᵗ. A $100,000 investment returning $25,000/year for 5 years has an NPV of about −$5,230 at a 10% discount rate (don't invest at that hurdle rate) but +$8,240 at a 6% rate. The rate where NPV equals zero is the IRR — about 7.9% in this example.

This NPV calculator discounts a series of yearly cash flows at your chosen rate and reports the net present value, the internal rate of return (IRR), and the payback period. You can add or remove cash-flow years, see each year's present value in a table, and watch the cumulative NPV curve cross zero at break-even.

How to use this calculator

  1. 1Enter the initial investment — the money paid out today (year 0).
  2. 2Set your discount rate: your cost of capital or required rate of return.
  3. 3Enter the expected cash flow for each year; add or remove years as needed.
  4. 4Review NPV, IRR, and payback period — positive NPV means the project beats your required return.
  5. 5Check the cumulative NPV chart to see when the project breaks even in present-value terms.

The formula

NPV=−I+ΣCFt(1+r)t
NPV = −I + Σ CFₜ ÷ (1 + r)ᵗ for t = 1…n. Each cash flow is divided by (1 + r) raised to its year, so distant cash is worth less today. IRR is the rate r that makes NPV exactly zero.
NPV
— Net present value
I
— Initial investment (year 0 outflow)
CFₜ
— Cash flow in year t
r
— Discount rate (required return)
t
— Year number

Worked example

The scenario

A $100,000 investment expected to return $25,000 per year for 5 years, evaluated at a 10% discount rate.

gives

The result

Present value of the cash flows = $25,000 × 3.7908 = $94,770. NPV = $94,770 − $100,000 = −$5,230, so the project fails a 10% hurdle. IRR ≈ 7.93% and the undiscounted payback period is 4.0 years.

Common use cases

  • Evaluating whether a business equipment purchase clears your cost of capital
  • Comparing two projects with different cash-flow timing on an equal footing
  • Valuing a rental property's cash flows against the purchase price
  • Setting a maximum purchase price by finding where NPV turns negative
  • Checking an investment pitch by computing its true IRR from projected cash flows

Limitations & assumptions

  • Outputs are only as good as the cash-flow forecasts — small estimate errors compound over time.
  • Assumes one discount rate for all years; real risk and rates change over time.
  • IRR can be undefined or misleading when cash flows change sign more than once.
  • Inflation, taxes, and terminal/salvage values must be built into your cash-flow estimates manually.

Frequently asked questions

A positive NPV means the investment returns more than your required rate after accounting for the time value of money — it creates value, so invest. For example, $25,000/year for 5 years on a $100,000 outlay has an NPV of +$8,240 at a 6% discount rate: the project effectively beats a 6% return by $8,240 in today's dollars. A negative NPV (−$5,230 at 10%) means the same cash flows fail a 10% hurdle.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.