Net present value: Discounting a Project’s Full Cash-Flow Schedule
NPV places the initial outlay and subsequent cash flows on a common present-value basis. A positive result means the entered cash flows exceed the modeled cost at the chosen discount rate.
Use the Net present value Calculator to enter your own figures and compare the result with the worked example below.
Net present value formula
NPV = Σ(CF_t ÷ (1+r)^t)
Worked example
| Item | Example value |
|---|---|
| Cash flows starting at time zero | -1000,400,400,400 |
| Discount rate per period | 10 % |
| Net present value | -5.259204 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Include time-zero cash flow with the correct sign. A favorable NPV cannot rescue unrealistic revenue forecasts or omitted expenses.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Introduction to investing. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.