NPV & IRR Calculator (Discounted Cash Flow)

Value a project with net present value, internal rate of return and discounted payback.

Formula

NPV = Σ CFₜ / (1 + r)ᵗ − initial investment

Tips

NPV above zero means the project beats your cost of capital. That is the decision rule — a large IRR on a tiny project can still be worth less than a modest IRR on a large one.
IRR fails when cash flows change sign more than once, which can produce several valid answers. NPV never has that problem, so prefer it when the two disagree.
The discount rate is the assumption that matters most. Move it by two points and marginal projects flip. Test a range rather than trusting one figure.
The profitability index (PV of inflows ÷ investment) is useful for ranking projects when capital is limited.

Frequently asked questions

What discount rate should I use?

Usually your weighted average cost of capital, or the return available on the next-best use of the money. Many companies add a risk premium for uncertain projects. Using a rate that is too low is the most common way a bad project gets approved.