NPV Calculator (Net Present Value)

Discounting follows standard time-value-of-money principles. Each cash flow is divided by (1 + r)^t where r is the annual discount rate expressed as a decimal and t is the period index.

For annuities the present value factor is used: PV = P * (1 - (1+r)^-N) / r, where P is the periodic payment, r is the periodic discount rate and N the number of periods.

Calculations assume periods are equally spaced and the discount rate provided is an annual rate. When compounding or period length differs from one year, users should convert rates accordingly before input.

Use this calculator to estimate whether an investment returns value above the chosen discount rate. Interpret results in the context of project risk, alternative uses of capital, and the assumptions entered.

Always verify inputs (sign convention for outflows/inflows, period definitions, and correct rate conversion) before making decisions.

Example 1 (manual series): Initial investment 1000, periodic cash inflows of 300 for 5 periods, discount rate 8%. NPV approximates the sum of discounted inflows minus 1000.

Example 2 (annuity): Initial investment 1000, annuity payment 300, 5 periods, discount rate 8% gives NPV using the annuity present value factor.

Example 3 (single future): Initial investment 1000, future cash flow 2000 at period 3, discount rate 8% discounts that single amount back to present value.