NPV Calculator
Calculate Net Present Value of an investment. Determine if a project is profitable based on discounted cash flows.
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Year 1
Year 2
Year 3
Year 4
Year 5
Net Present Value (NPV)
$48,032.61
Investment is profitable
Initial Investment
$100,000.00
PV of Cash Flows
$148,032.61
Total Undiscounted Cash Flows
$200,000.00
Year-by-Year Breakdown
| Year | Cash Flow | Present Value | Discount Factor |
|---|---|---|---|
| 0 (Investment) | -$100,000.00 | -$100,000.00 | 1.0000 |
| 1 | $30,000.00 | $27,272.73 | 0.9091 |
| 2 | $35,000.00 | $28,925.62 | 0.8264 |
| 3 | $40,000.00 | $30,052.59 | 0.7513 |
| 4 | $45,000.00 | $30,735.61 | 0.6830 |
| 5 | $50,000.00 | $31,046.07 | 0.6209 |
| Total | $100,000.00 | $48,032.61 |
Frequently Asked Questions
What is Net Present Value (NPV)?
NPV is the difference between the present value of future cash inflows and the initial investment. A positive NPV means the investment is expected to be profitable.
What discount rate should I use for NPV?
The discount rate typically reflects your required rate of return or the weighted average cost of capital (WACC). Common rates range from 8% to 15% depending on risk.
What does a negative NPV mean?
A negative NPV indicates the projected earnings from the investment, discounted to present value, are less than the initial cost, meaning the investment would lose money.