Net present value discounts future cash flows back to today. See whether a project adds value at your discount rate, plus its internal rate of return and payback.
Net present value discounts an investment's future cash flows back to today to see whether it creates value. This calculator returns the NPV at your chosen discount rate, the internal rate of return, and a simple payback period.
NPV sums the present value of every future cash flow, using your discount rate as the yardstick, and subtracts the upfront investment. A positive NPV means the project earns more than that rate and adds value; a negative NPV means it falls short. The discount rate usually reflects your cost of capital or the return available on comparable risk.
The internal rate of return is the discount rate that makes NPV exactly zero, a single percentage you can compare against your required return. Simple payback shows how many years of cash flow it takes to recover the investment, ignoring the time value of money. Together they give a rounded view, though this model assumes level annual cash flows that real projects rarely have.
It means the investment is expected to earn more than your discount rate, adding value. A negative NPV means it earns less than that hurdle.
It is the discount rate at which NPV equals zero. If the IRR is above your required return, the project clears the bar.
Simple payback just counts years to recover the cash, which is easy but overlooks that later dollars are worth less. NPV and IRR correct for that.
See the exact formula and a worked example on our methodology page.