NPV Calculator — Net Present Value
Free NPV calculator. Calculate the net present value of future cash flows for investment decisions.
Formula: Σ [Cash Flow / (1 + r)^t] - Initial Investment
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What Is This Calculator?
Net Present Value (NPV) calculates the present value of all future cash flows generated by an investment, minus the initial cost. A positive NPV means the investment is expected to generate more value than it costs. It accounts for the time value of money.
How to Calculate
To calculate NPV: 1) List all expected future cash flows. 2) Choose a discount rate (your required return). 3) Discount each cash flow back to present value. 4) Sum all present values. 5) Subtract the initial investment. Formula: NPV = Σ [CF / (1+r)^t] − Initial Investment.
Examples
Example: Invest $100,000 with $30,000 annual returns for 5 years at 10% discount rate. NPV = $30,000/1.1 + $30,000/1.21 + $30,000/1.331 + $30,000/1.4641 + $30,000/1.6105 − $100,000 = $13,724.
Recommended Tools
Tableau and Excel can model complex NPV scenarios with variable cash flows and multiple discount rates.
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