NPV / IRR Calculator
Enter a series of cash flows to compute Net Present Value and Internal Rate of Return.
| Period | Cash Flow | Discount Factor | Discounted Value | Cumulative CF |
|---|
Formulas:
NPV = Σ CFt / (1 + r)t— sum across all periods t.IRR: the rate r at which NPV equals zero. Computed by bisection.- Decision rule: accept the project if
NPV > 0orIRR > discount rate.
How NPV and IRR work
What NPV measures
Net Present Value is the value today of a series of future cash flows, minus the cost of the investment. If NPV is positive, the project earns more than the discount rate (i.e. it creates value). If NPV is negative, it earns less than the discount rate and should be rejected.
What IRR measures
The Internal Rate of Return is the discount rate that makes NPV exactly zero. It is the project's break-even return. Compare it to your hurdle rate (cost of capital or minimum acceptable return). IRR > hurdle rate ⇒ accept.
Sign convention
By convention, outflows are negative and inflows are positive. The initial investment is usually at t = 0 and is negative. Returns come at later periods and are positive. The calculator's default rows follow this convention; you can edit any value.
When IRR is unreliable
For non-conventional cash flows (e.g. alternating positive and negative, as in some leveraged projects), IRR can have multiple solutions or none at all. In those cases, fall back to NPV. This calculator uses bisection and reports a single rate between −99.99% and 1000%; it will show "—" if no valid IRR exists in that range.
Worked examples
Example 1: A simple project
Invest $10,000 today (t = 0: −10,000) and receive $3,000 / $4,000 / $5,000 over the next three years. With a 10% discount rate, the default rows show NPV = −$210.37 and IRR = 8.90%. Since IRR < 10%, the project does not clear the hurdle.
Example 2: Adding periods
Click "+ Add period" to insert another row. The new row defaults to t = max(existing) + 1 and amount = 0. Edit it. The schedule, totals, and IRR all recompute on the fly.
Example 3: Removing a row
Click the × on any row to remove it. The schedule and IRR update. Note: if you remove all positive or all negative cash flows, IRR becomes undefined (there is no rate that returns zero) and the result shows "—".
Related tools
NPV and IRR are the right tools whenever you have a stream of cash flows at different points in time and need to decide whether the stream is worth more or less than a single upfront amount. Three situations where this calculator earns its keep:
- Capital budgeting. A factory costs $500,000 today and produces $120,000/year for six years. Discount rate 8%. Plug in and read NPV directly: if NPV is positive, the project clears the hurdle.
- Comparing investments with different timelines. NPV flattens everything to a single present-day number, so projects of different lengths become comparable.
- Real-estate rental analysis. Down payment as t=0 outflow, monthly rent as inflows, sale price as a final inflow. See whether the numbers work.
For a single future lump sum (no stream), use the Present Value Calculator. For a fixed monthly payment with no flexibility, use the Loan Calculator. For a steady savings rate, use the Compound Interest Calculator.
Frequently asked questions
Why does IRR show "—"?
Either there are no positive cash flows to discount against the negatives (or vice versa), or the rate that zeros out the NPV lies outside the search range (−99.99% to 1000%). Try adjusting the cash flows or check that your signs are right (outflows negative, inflows positive).
Should I trust NPV or IRR more?
For most project decisions they give the same answer, and NPV is generally preferred in finance because it directly measures the dollar value created. Use IRR when comparing to a hurdle rate or when communicating to non-finance stakeholders ("we earn 18% on this").
What discount rate should I use?
The cost of capital for a project of similar risk. For a corporate project, the weighted average cost of capital (WACC). For a personal investment, the return you could earn on a comparable-risk alternative. The same rate is used to compare projects of the same risk class.