NPV Calculator

Calculate net present value from initial investment, cash flows, and discount rate.

By Konstantin Iakovlev · Updated April 2026 · Source: SEC

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NPV

$48,032.61

Total Cash Flows

$200,000.00

Year-by-Year PV

Year 1$30,000.00 → PV $27,272.73
Year 2$35,000.00 → PV $28,925.62
Year 3$40,000.00 → PV $30,052.59
Year 4$45,000.00 → PV $30,735.61
Year 5$50,000.00 → PV $31,046.07

Use the NPV Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Net present value answers a basic question about any investment you are weighing in 2026: are the future cash flows, once discounted back to today, worth more than what you have to put in? By restating tomorrow's returns in today's dollars, NPV lets you set the initial outlay against the present value of what comes back and judge whether a project stands up financially.

The figure is built by summing the present values of every future cash flow, positive and negative alike, and then subtracting the initial investment. Each cash flow is discounted with the formula CFt / (1 + r)^t, where CFt is the cash flow in period t, r is the discount rate, and t is the period number.

Two inputs decide whether the result is trustworthy. The discount rate must genuinely reflect your cost of capital or required rate of return; pick one that is too low and the project looks better than it is. Equally, cash flow projections need to stay grounded, because inflated estimates of future returns produce an NPV that flatters a weak investment.

Example: New Product Launch in 2026

  1. 1 Imagine a company considering launching a new product in early 2026. The initial investment required is $100,000. Expected cash flows are: Year 1: $30,000, Year 2: $40,000, Year 3: $50,000, Year 4: $20,000. The company's required rate of return (discount rate) is 8%.
  2. 2 Using the NPV formula: NPV = -$100,000 + ($30,000 / (1 + 0.08)^1) + ($40,000 / (1 + 0.08)^2) + ($50,000 / (1 + 0.08)^3) + ($20,000 / (1 + 0.08)^4).
  3. 3 The calculated Net Present Value for this product launch is approximately $13,446.
  4. 4 Since the NPV is positive ($13,446 > 0), this investment is considered financially attractive based on the projected cash flows and discount rate. The company should seriously consider proceeding with the new product launch as it is expected to generate value above its initial cost.

Source: SEC · Last updated: April 2026

Frequently Asked Questions

What is net present value (NPV)?
NPV calculates the present value of all future cash flows from an investment minus the initial cost. A positive NPV means the investment is expected to earn more than the discount rate and is worth pursuing. A negative NPV means the projected returns do not justify the cost.
How do I calculate NPV?
Discount each future cash flow by (1 + discount rate) raised to the power of the period number, then sum all discounted cash flows and subtract the initial investment. For example, a $10,000 investment returning $3,000/year for 5 years at a 10% discount rate has an NPV of $1,372.
What discount rate should I use for NPV?
Use your cost of capital or required rate of return. For businesses, this is often the WACC (weighted average cost of capital), typically 8-15%. For personal investments, use your opportunity cost (what you could earn elsewhere). Higher risk projects warrant higher discount rates.

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