How the nPV Calculator works
NPV discounts every future cash flow back to today at your required return, then subtracts the upfront cost. A positive NPV means the project creates value beyond that required return; a negative NPV means your money would earn more elsewhere.
NPV = −Investment + Σ CFt ÷ (1 + r)t
Example: a $10,000 investment returning $3,000 a year for four years, discounted at 10%, has an NPV of about −$490. The same cash flows discounted at 7% flip to roughly +$162, which shows how sensitive decisions are to the rate you demand.
Frequently asked questions
What discount rate should I use?
Use the return you could earn on an alternative of similar risk. Companies use their cost of capital, often 8% to 12%, while personal projects are often compared against stock market returns.
What does a profitability index above 1 mean?
It means each dollar invested returns more than a dollar of present value, which is the same signal as a positive NPV. It is useful for ranking projects of different sizes.
NPV vs IRR, which is better?
NPV answers how much value a project adds at your rate, while IRR reports the break-even rate itself. NPV is generally the safer decision tool when cash flows change sign or projects differ in size.