NPV Calculator (Net Present Value)
Calculate Net Present Value (NPV), Internal Rate of Return (IRR), and Profitability Index with discount rate sensitivity modeling.
Discounted Cash Flow Parameters
📊 Undiscounted vs Discounted Cash Flows
Comparing nominal cash receipts with their present value today under a 10% discount rate.
Year-by-Year DCF Amortization Schedule
Step-by-step present value factors and cumulative PV accumulation.
| Year | Nominal Inflow | PV Factor (1/(1+r)^t) | Discounted PV | Cumulative PV |
|---|---|---|---|---|
| Year 1 | $25,000 | 0.9091 | $22,727.27 | $22,727.27 |
| Year 2 | $35,000 | 0.8264 | $28,925.62 | $51,652.89 |
| Year 3 | $45,000 | 0.7513 | $33,809.17 | $85,462.06 |
| Year 4 | $30,000 | 0.6830 | $20,490.40 | $105,952.46 |
| Year 5 | $20,000 | 0.6209 | $12,418.43 | $118,370.89 |
🎛️ Discount Rate Sensitivity Matrix
Stress test your investment valuation across varying financing costs and hurdle rates.
Mastering Net Present Value (NPV) & Corporate Valuation
The Golden Rule of Capital Budgeting: NPV > 0
Net Present Value (NPV) is widely regarded by corporate CFOs and investment bankers as the single most reliable capital budgeting metric. Unlike accounting profit or simple payback periods, NPV discounts all future cash inflows back to present value terms using the Weighted Average Cost of Capital (WACC).
| NPV Status | Meaning | Corporate Action |
|---|---|---|
| NPV > 0 | Project return exceeds cost of capital; creates shareholder value | Accept Investment |
| NPV = 0 | Project earns exactly the required discount rate with zero excess alpha | Indifferent / Neutral |
| NPV < 0 | Project fails to cover financing hurdles; destroys enterprise value | Reject Investment |
NPV vs IRR vs Payback Period
For holistic decision making, financial leaders cross-reference NPV with complementary metrics: Use our payback period calculator to gauge liquidity risk, our break-even calculator to evaluate unit margins, and our CAGR calculator to track annualized compounding.