NPV Calculator — Net Present Value & Discounted Cash Flow

Calculate Net Present Value from an initial investment, discount rate, and multiple cash flow periods, with a year-by-year discounted cash flow table.

July 14, 2026

Initial Investment ($)

Discount Rate (%)

PeriodCash Flow ($)

Year 1

Year 2

Year 3

Net Present Value

$1,307.29

Profitable at a 10% discount rate — projected returns exceed the required rate.

Period	Cash Flow	Present Value	Cumulative NPV
Now (t=0)	-$10,000.00	-$10,000.00	-$10,000.00
Year 1	$3,000.00	$2,727.27	-$7,272.73
Year 2	$4,200.00	$3,471.07	-$3,801.65
Year 3	$6,800.00	$5,108.94	$1,307.29

NPV = Σ [CFt ÷ (1+r)^t] − Initial Investment, where CFt is the cash flow received in period t and r is the discount rate. Each future cash flow is discounted back to today's dollars before the initial investment is subtracted. A positive NPV means the investment is expected to add value above the discount rate; a negative NPV means it's expected to destroy value at that rate.

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Reference Values

Last verified: Jul 11, 2026

Category	Range	What It Means	Status
NPV > 0 — Accept ★	Positive $ value	Discounted future cash flows exceed the initial investment at the chosen discount rate. The project or investment is expected to add value above what the discount rate requires.	★ Best
NPV = 0 — Indifferent	$0 (break-even)	Discounted future cash flows exactly equal the initial investment. The project returns precisely the discount rate — no better, no worse — so it neither adds nor destroys value at that required rate.	Okay
NPV < 0 — Reject	Negative $ value	Discounted future cash flows fall short of the initial investment. The project is expected to destroy value at that discount rate — a lower-risk or higher-return alternative would likely be a better use of the capital.	Poor
Risk-free / Treasury-anchored rate	~4% – 5%	A common floor for the discount rate, anchored to current long-term U.S. Treasury yields — appropriate only for cash flows with government-level certainty.	Okay
Corporate WACC (typical use case)	8% – 12%	The most common real-world discount rate for company capital-budgeting decisions — the business's weighted average cost of capital (blended cost of debt and equity).	Good
High-risk venture / startup hurdle rate	20% – 30%+	Investors and founders often apply a much higher discount rate to early-stage or high-uncertainty cash flows to compensate for the elevated risk of the projections not materializing.	Good

Source: Net present value decision rule and discount-rate benchmarking are standard corporate finance conventions (Brealey, Myers & Allen, "Principles of Corporate Finance"; Corporate Finance Institute WACC/hurdle-rate guidance). Actual appropriate discount rates vary by company, industry, and project risk — always confirm against your organization's own cost of capital or a qualified financial advisor.

Worked Examples

Small Business Project (3-Year Cash Flows)

Initial Investment: $10,000
Discount Rate: 10%
Cash Flows: Year 1: $3,000 · Year 2: $4,200 · Year 3: $6,800

NPV = $1,307.29

Discounted cash flows: $2,727.27 + $3,471.07 + $5,108.94 = $11,307.29. Subtract the $10,000 initial investment: $11,307.29 − $10,000 = $1,307.29. Positive NPV — the project is expected to add value above the 10% required return.

Equipment Purchase (4-Year Payback)

Initial Investment: $25,000
Discount Rate: 8%
Cash Flows: Year 1: $8,000 · Year 2: $9,000 · Year 3: $10,000 · Year 4: $11,000

NPV = $6,147.11

Discounted cash flows: $7,407.41 + $7,716.05 + $7,938.32 + $8,085.33 = $31,147.11. Subtract the $25,000 initial cost: $31,147.11 − $25,000 = $6,147.11. Strongly positive NPV — the equipment is expected to generate well above its 8% cost of capital.

Overpriced Acquisition (Negative NPV)

Initial Investment: $50,000
Discount Rate: 12%
Cash Flows: Year 1: $10,000 · Year 2: $12,000 · Year 3: $14,000 · Year 4: $15,000

NPV = -$12,007.41

Discounted cash flows: $8,928.57 + $9,566.33 + $9,964.92 + $9,532.77 = $37,992.59. Subtract the $50,000 initial investment: $37,992.59 − $50,000 = -$12,007.41. Negative NPV — at a 12% required return, the projected cash flows don't come close to covering the upfront cost.

Marginal Project Near Break-Even

Initial Investment: $20,000
Discount Rate: 9%
Cash Flows: Year 1: $5,000 · Year 2: $6,000 · Year 3: $7,000 · Year 4: $8,000

NPV = $709.92

Discounted cash flows: $4,587.16 + $5,050.08 + $5,405.28 + $5,667.40 = $20,709.92. Subtract the $20,000 initial investment: $20,709.92 − $20,000 = $709.92. Barely positive — this project clears its 9% hurdle rate by a thin margin, so small changes in assumptions could flip the decision.

Rental Property Investment (6-Year Hold Plus Sale)

Initial Investment: $150,000
Discount Rate: 6%
Cash Flows: Year 1: $12,000 · Year 2: $12,000 · Year 3: $12,500 · Year 4: $13,000 · Year 5: $13,500 · Year 6: $180,000 (rental income + sale proceeds)

NPV = $29,774.05

Discounted cash flows sum to $179,774.05 across the 6 years (largest single component: $126,892.90 from the Year 6 sale proceeds). Subtract the $150,000 purchase price: $179,774.05 − $150,000 = $29,774.05. Positive NPV at a 6% discount rate — the rental income plus eventual sale is expected to outperform a 6% alternative investment.

How to Use This Calculator

1

Enter your initial investment

The upfront cost paid today (t=0) — a purchase price, project cost, or capital outlay.
2

Set your discount rate

Your required rate of return or cost of capital, entered as a percentage — see the FAQ below for how to choose one.
3

Enter each period's expected cash flow

Add a row for every future year (or other period) you expect to receive money back, using "+ Add Cash Flow Period" for more years.
4

Read your NPV and the year-by-year breakdown

The result updates instantly and shows each period's present value plus a running cumulative NPV, so you can see exactly which years tip the total positive or negative.

What Each Value Means

Net Present Value (NPV) ($): The sum of all future cash flows discounted back to today's dollars, minus the initial investment — the total value an investment is expected to add or subtract in today's money.
Discount Rate (% per year): The annual rate used to convert future cash flows into present-day value, typically set to your cost of capital, required return, or the return available on an equally risky alternative.
Present Value (of a cash flow) ($): What a specific future cash flow is worth today, calculated by dividing it by (1 + discount rate) raised to the number of periods until it's received.

Frequently Asked Questions

What does NPV actually measure?

Net Present Value measures how much value an investment is expected to add or destroy in today's dollars, after accounting for the fact that a dollar received in the future is worth less than a dollar in hand today. It takes every future cash flow the investment is expected to produce, discounts each one back to its present-day worth using a chosen discount rate, adds them all together, and subtracts the upfront cost. A positive NPV means the investment is projected to earn more than the discount rate requires; a negative NPV means it falls short.

How do I choose a discount rate?

The discount rate should reflect the return you could reasonably earn on an alternative investment of similar risk — often called the opportunity cost of capital. Businesses commonly use their weighted average cost of capital (WACC), typically in the 8%–12% range for established companies. A safer, near-certain cash flow might use a rate closer to the risk-free Treasury yield (around 4%–5%), while a speculative startup or venture investment often uses a much higher hurdle rate — 20% or more — to compensate for the added uncertainty. There's no single universally correct rate; it should match the risk of the specific cash flows you're evaluating.

What does a negative NPV mean?

A negative NPV means the investment's discounted future cash flows don't cover the initial cost at your chosen discount rate — in other words, the money is expected to earn less than the return you could get from an equally risky alternative. It doesn't necessarily mean the investment loses money outright; it means it underperforms the bar you set with your discount rate. Raising the discount rate (to reflect a more realistic risk level) or finding ways to increase early cash flows are common ways an investment moves from negative to positive NPV.

What's the difference between NPV and IRR?

NPV expresses an investment's value in dollars at a discount rate you choose; the Internal Rate of Return (IRR) instead solves for the discount rate at which NPV would equal exactly zero, expressing the result as a percentage. They usually agree on accept/reject decisions for a single, straightforward project, but they can disagree when comparing two mutually exclusive projects of different sizes or cash-flow timing — in those cases, most corporate finance practitioners treat NPV as the more reliable decision metric because it directly measures dollar value added, while IRR can be misleading when cash flows aren't a simple upfront-cost-then-returns pattern.

Does NPV account for risk?

Only indirectly, through the discount rate you choose — NPV itself doesn't automatically adjust for risk on its own. A higher discount rate reduces the present value of future cash flows more aggressively, which is how riskier or less certain projects get penalized in the calculation. This means the quality of an NPV result depends heavily on picking a discount rate that genuinely reflects the uncertainty of the specific cash flows being evaluated — using too low a discount rate on a risky, uncertain project will overstate its true value.