NPV Calculator
Calculate the Net Present Value of future cash flows at a given discount rate. Determine whether an investment creates or destroys financial value.
CASH FLOWS
NET PRESENT VALUE
₹20,401.612
✅ Investment is profitable at 10% discount rate
| Year | Cash Flow | Present Value |
|---|---|---|
| 0 | ₹-1,00,000 | ₹-1,00,000 |
| 1 | ₹30,000 | ₹27,272.727 |
| 2 | ₹35,000 | ₹28,925.62 |
| 3 | ₹40,000 | ₹30,052.592 |
| 4 | ₹50,000 | ₹34,150.673 |
What is NPV?
Net Present Value (NPV) is the difference between the present value of all future cash inflows and the initial investment cost. It answers the fundamental question: "Is this investment worth more than it costs?"
NPV Formula
NPV = Σ [Cash Flow_t / (1 + r)^t]
Where r is the discount rate (your required return) and t is the time period.
Decision Rule
- NPV > 0: ✅ Investment creates value — accept
- NPV = 0: ⚖️ Investment breaks even at your required return
- NPV < 0: ❌ Investment destroys value — reject
Choosing the Discount Rate
The discount rate represents your opportunity cost — what you could earn elsewhere at similar risk. Common choices: risk-free rate (government bond yield ~7%), equity returns (12-15%), or WACC for corporate projects.
Where:
- NPV = Net Present Value (total value created/destroyed)
- CFₜ = Cash flow at time period t (negative = investment)
- r = Discount rate (opportunity cost / required return)
- t = Time period (0, 1, 2, ... n years)
📝 Worked Example
Invest ₹1L, earn ₹30K, ₹35K, ₹40K, ₹50K at 10% discount
NPV = -1,00,000 + 27,273 + 28,926 + 30,053 + 34,151= NPV = +₹20,402 → Invest! ✅