NPV & IRR Calculator
Discount a stream of cash flows to present value, find the internal rate of return, and see the payback period.
Your details
Entered as a positive number; treated as an outflow
Assumptions
Your cost of capital or required return
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Net present value
$111,552
Creates value at a 10.0% discount rate
Includes your inputs, the full breakdown, and every row of the table.
IRR
20.72%
Payback period
3.9 years
Discounted payback
5.1 years
Profitability index
1.45
- Initial investment
- - $250,000
- Total cash in (undiscounted)
- $552,854
- Net undiscounted
- $302,854
- Present value at 10.0%
- $361,552
- Net present value
- $111,552
| Year | Cash flow | Present value | Cumulative | Cumulative PV |
|---|---|---|---|---|
| Year 1 | $60,000 | $54,545 | -$190,000 | -$195,455 |
| Year 2 | $62,400 | $51,570 | -$127,600 | -$143,884 |
| Year 3 | $64,896 | $48,757 | -$62,704 | -$95,127 |
| Year 4 | $67,492 | $46,098 | $4,788 | -$49,029 |
| Year 5 | $70,192 | $43,583 | $74,979 | -$5,446 |
| Year 6 | $72,999 | $41,206 | $147,979 | $35,760 |
| Year 7 | $75,919 | $38,959 | $223,898 | $74,719 |
| Year 8 | $78,956 | $36,834 | $302,854 | $111,552 |
What this means
- A positive NPV means the project returns more than your required rate. On this measure alone it is worth doing.
- The IRR of 20.72% is the discount rate at which NPV would be exactly zero — the project's break-even cost of capital.
- NPV is the more reliable measure when comparing projects. IRR can mislead on projects of very different sizes or with cash flows that change sign more than once.
How the npv & irr calculation works
Net present value answers whether a stream of future cash is worth more than what you must pay today, once you account for the fact that money arriving later is worth less than money in hand. The discount rate carries all the weight in that judgment: it represents what you could earn elsewhere at similar risk, and small changes to it can flip a project from attractive to unattractive. Choosing it honestly is harder and more important than the arithmetic that follows.
The internal rate of return expresses the same information differently — it is the discount rate that would drive NPV to exactly zero, so it represents the project's own break-even cost of capital. Managers often prefer it because a percentage feels more comparable than a dollar figure, but it has real weaknesses: it says nothing about scale, so a tiny project with a spectacular IRR can look better than a large one that creates far more value, and it can produce multiple answers or none at all when cash flows alternate sign. When the two measures disagree, NPV is the one to trust.
Frequently asked questions
What discount rate should I use?
Your cost of capital, adjusted for the risk of this particular project. A business might use its weighted average cost of capital as a baseline and add a premium for anything unusually uncertain. An individual investor often uses the return available from a comparable alternative. The rate should reflect risk, so a speculative project deserves a higher one than a safe one.
NPV and IRR disagree — which do I follow?
NPV, in almost every case. IRR is a ratio and therefore blind to scale, so it can favour a small project with a high percentage return over a large one that generates far more actual value. Since your goal is maximising value rather than percentages, NPV gives the right answer when they conflict.
Why does payback period matter if I have NPV?
It captures something NPV does not: how long your capital is exposed. A project with a strong NPV that takes nine years to return its investment carries a great deal of forecast risk, since the later years are the least reliable part of any model. Payback is a crude measure, but it is a useful sanity check alongside the discounted figures.
Related calculators
ROI Calculator
Return on investment, annualised so you can compare a six-month project against a three-year one honestly.
BusinessCAGR Calculator
Find the compound annual growth rate between two values, and see why it differs from the average yearly return.
InvestingInvestment Return Calculator
Turn a starting and ending value into total return, annualised return (CAGR), and a comparison against a benchmark.
InvestingBusiness Loan Calculator
Payment, total interest, and the true APR once the origination fee is counted — plus what the interest deduction actually saves you.
BusinessSpotted a problem, or want this calculator to do more?Corrections are fixed first, and the most-requested features get built next.Tell us →
Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.