Calculate the net present value (NPV) of a series of future cash flows. Enter your initial investment, discount rate, and expected cash flows to evaluate whether a project or investment is financially worthwhile.
e.g. 30000, 35000, 40000 — one value per year
Net Present Value
$48,032.61
Total Future Cash Flows
$200,000.00
Decision
Accept
| Year | Cash Flow | PV Factor | Present Value |
|---|---|---|---|
| 1 | $30,000.00 | 0.9091 | $27,272.73 |
| 2 | $35,000.00 | 0.8264 | $28,925.62 |
| 3 | $40,000.00 | 0.7513 | $30,052.59 |
| 4 | $45,000.00 | 0.6830 | $30,735.61 |
| 5 | $50,000.00 | 0.6209 | $31,046.07 |
$48,032.61
Positive NPV -- Investment adds value
$48,032.61
This investment creates value. The present value of future cash flows exceeds the initial cost.
Profitability Index
1.48x
Above 1 = creates value
Undiscounted Return
100.0%
total cash flows vs investment
* Current discount rate. Green = positive NPV (invest), Red = negative NPV (reject)
Net Present Value discounts future cash flows back to today using a required rate of return. Each future cash flow is worth less than the same amount today because of the time value of money — a dollar today can be invested and grow. By comparing the total present value of all expected cash flows against the upfront cost, NPV tells you whether a project will create or destroy value. It is one of the most widely used tools in capital budgeting and investment analysis.
NPV is a financial metric that calculates the difference between the present value of expected future cash flows and the initial investment cost. A positive NPV indicates the project is expected to generate value, while a negative NPV suggests it would destroy value.
The discount rate typically reflects the cost of capital or the minimum required rate of return. Common choices include the weighted average cost of capital (WACC), the hurdle rate set by management, or the opportunity cost of capital from alternative investments.
A negative NPV means the present value of expected cash flows is less than the initial investment. The project would not earn enough to justify its cost at the given discount rate. Generally, projects with negative NPV should be rejected.
NPV provides an absolute dollar value of a project's worth today, accounting for the time value of money. ROI gives a percentage return but doesn't consider when cash flows occur. NPV is generally preferred for capital budgeting decisions because it accounts for timing.
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