NPV Calculator

NPV is the difference between the present value of all future cash inflows and the initial investment. It tells you how much value (in today's dollars) a project will create. If NPV > 0, the project adds value. If NPV < 0, the project destroys value.

The discount rate is your required rate of return — the minimum return needed to justify an investment. It reflects your cost of capital, the project's risk (higher risk = higher rate), and the opportunity cost of not investing elsewhere. Common rates run 8-12% for large, stable firms and much higher for early-stage or high-risk ventures.

Yes. A project can be profitable in simple terms (total revenue exceeds total cost) but still have a negative NPV if the returns arrive too slowly to clear your required return. For example, a $100,000 investment returning $30,000 a year for 4 years nets $20,000 in raw profit, but at a 10% discount rate the NPV could still be negative — meaning the timing of the cash flows doesn't justify your cost of capital.

Use WACC (Weighted Average Cost of Capital): (% debt × cost of debt) + (% equity × cost of equity), then adjust upward for project-specific risk. For example, if a company's WACC is 10% and a particular project is riskier than the company average, use 12-15% instead. Early-stage or venture investments often use much higher rates (40-80%) to reflect their risk.

NPV shows the dollar value created, in today's dollars, at a discount rate you choose. IRR shows the percentage return the project generates on its own. If IRR is greater than your discount rate, NPV will be positive; if IRR is lower, NPV will be negative. NPV is generally considered superior for ranking and choosing between projects, especially ones of different sizes, while IRR is easier to communicate as a single percentage.