NPV Calculator

Calculate Net Present Value (NPV) for investment analysis and project evaluation. Analyze cash flows, discount rates, and make informed investment decisions with comprehensive financial insights.

✓ Cash Flow Analysis ✓ Investment Evaluation ✓ Risk Assessment

NPV Calculator

Initial Investment

Initial cash outflow (negative value)

Required rate of return (WACC)

Number of years for cash flows

Cash Flow Pattern

Annual Cash Flows

NPV Formula

Net Present Value calculation

Formula:

NPV = Σ [CFt / (1 + r)^t] - Initial Investment
Where: CFt = Cash flow at time t, r = Discount rate, t = Time period

Investment Examples

Equipment Purchase
Manufacturing equipment investment
Real Estate Project
Property development investment
Technology Upgrade
IT system modernization

Decision Rules

NPV > 0: Accept project
NPV = 0: Indifferent
NPV < 0: Reject project
Higher NPV: Better investment

Key Factors

💰 Cash Flows: Timing and magnitude
📊 Discount Rate: Risk and opportunity cost
⏰ Time Value: Money's decreasing value
🎯 Risk Assessment: Project uncertainty
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Understanding NPV

Net Present Value (NPV) is a fundamental capital budgeting technique that calculates the present value of future cash flows minus the initial investment, helping evaluate investment profitability.

  • Time Value of Money: Accounts for money's changing value over time
  • Risk Adjustment: Uses discount rate to reflect investment risk
  • Absolute Measure: Shows dollar value creation or destruction
  • Decision Tool: Clear accept/reject criteria for investments

NPV Applications

Capital Budgeting

Evaluate and rank investment projects for optimal resource allocation.

Business Valuation

Value companies and business units using discounted cash flow models.

Project Comparison

Compare mutually exclusive projects and select the best option.

Investment Analysis

Assess real estate, equipment, and strategic investments.