NPV Calculator

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.

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.

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.

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.

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.

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.