Net present value
Discount each annual cash flow to today, including the initial cash flow at time zero.
How this works
Net present value = Σ CF_t/(1+r)^t. CF_0 is the first entered cash flow and occurs today; each later entry is one year after the previous entry. The annual discount rate r is the entered percentage divided by 100. Negative entries represent outflows and positive entries inflows.
Example
The illustration may use different inputs from the reproducible default inputs listed below.
The defaults calculate −$10,000 + $4,000/1.10 + $4,000/(1.10)^2 + $4,000/(1.10)^3. With all reset-default inputs, net present value: $-52.59.
- Cash flows: today, year 1, year 2… ($)
- -10000,4000,4000,4000
- Annual discount rate (%)
- 10
- Net present value
- $-52.59
Scope and assumptions
Supports up to 100 equally spaced annual cash flows, not actual payment dates or irregular periods. The discount rate is constant and nonnegative. The calculation does not independently adjust cash flows for taxes, inflation or risk; a positive NPV is not by itself an investment recommendation.
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