Net Present Value (NPV) Calculator
Calculate the Net Present Value of your investment to make better financial decisions.
Understanding Net Present Value (NPV)
What is NPV?
Net Present Value (NPV) is a financial metric that calculates the present value of future cash flows from an investment, minus the initial investment cost. It helps determine whether an investment will be profitable over time.
When to Use NPV
Use NPV when evaluating investment opportunities, capital projects, or business ventures. A positive NPV indicates a potentially profitable investment, while a negative NPV suggests the investment may result in a loss.
NPV vs IRR
While NPV shows the actual dollar value of returns, Internal Rate of Return (IRR) shows the percentage return. Both metrics are valuable for investment decision-making, but NPV provides a clearer picture of actual monetary value.
Decision Making
Generally, accept investments with positive NPV and reject those with negative NPV. When comparing multiple investments, choose the one with the highest NPV, considering other factors like risk and resource requirements.