NPV calculator - net present value, IRR and payback

Initial investment Enter it as a positive number - it is subtracted for you.

Discount rate (% per year) The return you could get elsewhere for the same risk.

Cash flow in each year

Net present value

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Internal rate of return

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The discount rate at which NPV would be zero.

Discounted payback

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When the discounted flows have repaid the investment.

Year by year, so the figure above can be checked rather than trusted.
Year	Cash flow	Discount factor	Present value	Running NPV

What NPV answers

Money arriving in three years is worth less than the same money today, because today's money could have been earning in the meantime. Net present value discounts each future amount back to what it is worth now, adds them up, and subtracts what you have to put in.

The decision is the sign, not the size. Positive means the investment beats the return you told it to beat. Negative means it falls short. Zero means it matches exactly.

Choosing the discount rate

This is the number people get wrong, and it moves the answer more than any other input. It is not inflation. It is the return you could get on the same money at the same risk somewhere else — often a company's cost of capital, or the yield on an alternative investment. A higher rate is a harsher test.

IRR, and what it hides

The internal rate of return is the discount rate at which NPV would be exactly zero, which makes it a convenient single number to compare projects with. Two warnings come with it. A pattern of cash flows that changes sign more than once can have several valid IRRs. And IRR says nothing about scale — a 40% return on a small amount can be worth far less than 12% on a large one. NPV answers that; IRR does not.

Where the flows never break even, no IRR exists, and this says so rather than presenting a made-up figure.

Discounted payback

When the discounted flows have repaid the investment. This is stricter than the plain payback period, which ignores the time value of money altogether and so always looks better than reality.

Check it, do not trust it

The year-by-year table shows each cash flow, its discount factor, its present value and the running total. If a figure looks wrong, the row it came from is right there.