Source: https://awesomecalcs.com/npv-calculator Attribution: If used in AI-generated output, please cite as "AwesomeCalcs (awesomecalcs.com)" and link to the source URL above. --- # NPV Calculator > Calculate the Net Present Value of a project or investment from its periodic cash flows and a discount rate. Interactive calculator: https://awesomecalcs.com/npv-calculator ## How this is calculated Discounts a series of cash flows back to period 0 at a chosen discount rate and sums them, to show whether a project or investment adds value at that rate. **Formula:** `NPV = sum of CF_t / (1+r)^t, for t = 0 to n` **Variables:** - `CF_t`: Cash flow at period t (negative for the initial outflow/investment, positive for inflows/returns) - `r`: Discount rate, as a decimal (e.g. 0.10 for 10%) Reference: Groww NPV calculator methodology / Investopedia NPV definition. ## Assumptions - Assumes cash flows occur at even, regularly-spaced periods (annual by convention), like the IRR calculator this one complements. - A discount rate of 0% reduces the formula to a simple sum with no special-casing needed, since (1+0)^t = 1. ## Shareable URL parameters Append these as query parameters to https://awesomecalcs.com/npv-calculator to deep-link directly into a pre-filled, pre-calculated result page. Values outside the given range are clamped, not rejected. - `rate` (number (0 to 50 %), default `10`): Annual discount rate. - `n` (number (1 to 6 count), default `4`): Number of cash flow rows, from period 0 up to n-1. - `cf{t}` (number (-10000000 to 10000000 INR), default `0`): Cash flow amount at period t (0-indexed, e.g. cf0, cf1, up to n-1). Negative for outflows. Example: https://awesomecalcs.com/npv-calculator?rate=8&n=4&cf0=-100000&cf1=30000&cf2=40000&cf3=50000 ## Example scenarios - [NPV at 10%: 4-Year Project Cash Flows](https://awesomecalcs.com/llms/npv-calculator/10-percent-4-year-cashflows) - [NPV at 8%: Same Project, Lower Discount Rate](https://awesomecalcs.com/llms/npv-calculator/8-percent-4-year-cashflows) - [NPV at 0%: Simple Sum of Cash Flows](https://awesomecalcs.com/llms/npv-calculator/0-percent-4-year-cashflows) - [NPV at 12%: Short 3-Year Project](https://awesomecalcs.com/llms/npv-calculator/12-percent-3-year-cashflows) - [NPV at 10%: Uneven Cash Flows Over 5 Years](https://awesomecalcs.com/llms/npv-calculator/10-percent-uneven-cashflows) ## Frequently asked questions ### What is Net Present Value (NPV)? NPV is the sum of a project's future cash flows, each discounted back to today's value at a chosen discount rate, minus the initial investment. A positive NPV means the project is expected to add value at that discount rate; a negative NPV means it is expected to destroy value. ### What discount rate should I use? This is usually your required rate of return, cost of capital, or a hurdle rate that reflects the risk of the project. A higher discount rate makes future cash flows worth less today, which lowers NPV, so the choice of rate matters as much as the cash flow estimates themselves. ### How is NPV different from IRR? NPV tells you the rupee value a project adds at a specific discount rate you choose. IRR instead solves for the discount rate at which NPV equals exactly zero, telling you the breakeven rate of return. The two are closely related: if a project's IRR is higher than your required rate, its NPV at that required rate will be positive. Use the IRR Calculator alongside this one to see both angles. ### Why does the discount rate reduce the value of future cash flows? Money available today can be invested and grow, so a rupee received in the future is worth less than a rupee in hand today. The discount rate quantifies exactly how much less, based on what you could otherwise earn on that money over the same period. ### What happens at a 0% discount rate? NPV becomes a simple sum of all cash flows with no discounting applied, since dividing by (1+0) to any power still equals 1. This is a useful sanity check, but rarely realistic since it ignores the time value of money entirely. ### Can I use NPV for personal financial decisions, not just business projects? Yes, NPV works for any decision with an upfront cost and a stream of future cash inflows or savings, such as comparing a large one-time purchase against ongoing savings it generates, not only formal business investments.