📊 NPV Calculator
Calculate Net Present Value of future cash flows discounted at your required rate of return.
How NPV Works
NPV = Sum of (Cash Flow ÷ (1+r)^t) − Initial Investment. A positive NPV means the investment creates value above your required return — accept it. A negative NPV means you'd earn less than your required return — reject it. NPV is the gold standard for capital budgeting because it accounts for the time value of money and produces an absolute dollar measure of value created.
People Also Ask
Use your Weighted Average Cost of Capital (WACC) for corporate projects — it represents the blended cost of debt and equity financing. For personal investments, use your expected alternative investment return (opportunity cost). For real estate, 8–12% is commonly used. A higher discount rate makes future cash flows worth less today, resulting in lower NPV.
When comparing mutually exclusive projects, NPV and IRR can give different rankings. A large project with lower IRR may have higher NPV than a small project with higher IRR. Always use NPV for final decision-making when projects are mutually exclusive, as it measures total value created — not just percentage return.