Finance and accounting
Net present value (NPV) calculator
Discount a series of cash flows to net present value, with the textbook period-0 or the spreadsheet NPV timing and a discounted cash flow table.
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Result
Method and limits
Net present value adds each cash flow divided by (1 + r) raised to its period. A positive NPV means the cash flows return more than the discount rate.
NPV = Σ CF_t / (1 + r)^t, t = 0, 1, 2, …Spreadsheet NPV discounts its first value by one full period. To include an outlay made today, either choose that convention and add the outlay outside, or use the period-0 option here.
Assumptions and limits
- Cash flows are equally spaced; use the XIRR and XNPV calculator for irregular dates.
- One discount rate applies to every period.
- An educational calculation, not financial, tax, legal or investment advice.
Worked example
At 8%, an outlay of 40,000 now followed by 8,000, 9,200, 10,000, 12,000 and 14,500 has an NPV of 1,922.06, the result Microsoft gives for NPV(8%, 8000, 9200, 10000, 12000, 14500) − 40000. With the spreadsheet timing, 10% and −10,000, 3,000, 4,200, 6,800 give 1,188.44.
References
Related tools
- IRR and MIRR calculatorInternal rate of return and modified internal rate of return of periodic cash flows, with a warning when the cash flows allow more than one IRR.
- XIRR and XNPV calculator for dated cash flowsAnnualized internal rate of return and net present value for cash flows on irregular dates, matching spreadsheet XIRR and XNPV.
- Payback and discounted payback period calculatorHow long an investment takes to recover its cost from cash flows, with and without discounting, and a cumulative cash flow table.
- Discounted cash flow (DCF) valuation calculatorSimple DCF valuation: discount forecast free cash flows and a Gordon-growth terminal value to enterprise value, equity value and value per share.