NPV Calculator

How this result is built

Discount a list of cash flows at a hurdle rate and read the net present value.

Net present value adds every cash flow after discounting it for how long you wait. The first line is not discounted. A positive NPV means the project clears the rate you typed. A negative NPV means it does not.

What the opening example is for

The rate is per period, matching the spacing of the lines. Do not drop an annual hurdle rate onto monthly cash flows without converting it.

The walkthrough below uses the numbers already sitting in NPV Calculator. Press Calculate and the headline should match this page. Then put your own figures in. The math does not run until you press the button, and Clear hides the result.

What each field is doing

The “Discount rate per period” line on NPV Calculator starts at 8%. The other fields stay put while you change this one. That is the clean way to see what this line is doing inside the result.

NPV Calculator treats “Cash flows, time zero first” as its own entry, and the form opens with -20000 5000 7000 8000 9000. If the label is a rate, type the annual figure the contract uses. If it is money, type the amount that will actually move, not a rounded hope.

The opening result, line by line

Press Calculate on the opening form and Net present value is $3,596.93. That is the number the rest of this section is talking about.

Discount rate is 8.00% when you run the opening figures on NPV Calculator. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

On this opening pass, undiscounted sum is $9,000.00. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

How those lines were produced

At this discount rate, the project covers the return you required.

The formula line on the page is NPV = Σ Cash flow_t / (1+r)^t. It is there so you can see the relationship the buttons are using. A schedule, when the page draws one, is that same series written row by row.

A second pass changes only “Discount rate per period”, from 8% to 7.00%. Net present value moves from $3,596.93 to $4,183.41. Nothing else on the form was edited, so the gap between those two results is the effect of that one field on NPV Calculator. If the gap is tiny, this page is not very sensitive to that entry. If the gap is large, get that entry from a document before you plan around the result.

What this page will not claim

NPV Calculator compounds the rate you type. Markets do not pay a flat rate, and a fund fee comes out of the return before you should type it. The page is the equation, not a forecast and not a recommendation to buy or sell.

NPV Calculator stops at its own formula. When the next question is different, open IRR Calculator (The rate that sets NPV to zero.); Payback Period Calculator (Years to earn the cost back, with a discount rate.); Present Value Calculator (What a future sum is worth today.). Do not add those results to this one as if they were the same kind of dollar.

Check the result before you use it

Start on NPV Calculator by reading the labels, not the headline. The opening labels are Discount rate per period (8%), Cash flows, time zero first (-20000 5000 7000 8000 9000). If a label is not the fact you have, the result cannot turn into that fact later. The illustration on the form lands on $3,596.93. When you press Calculate and see that same figure, the button and this explanation are using one formula.

Change one field at a time. Write down the headline, edit a single line, and press Calculate again. A large jump means that line carries the result. A line that does not move is a line the formula ignores, which is a reason to confirm you opened the right page. NPV Calculator is built for one job: Cash flows discounted at the rate you require. The description on the page says the same thing in a sentence: Discount a list of cash flows at a hurdle rate and read the net present value.

When the paperwork disagrees

Then hold the headline next to a source outside the site. That source might be a loan estimate, an account statement, a pay stub, or the public limit named in the methodology. A few cents of difference on a long schedule is ordinary rounding. A different rate, a fee you never typed, or a tax the form does not ask for is not rounding. Correct the input. Do not average the page with the paperwork.

When the outside source still disagrees, NPV Calculator has reached the edge of what it will claim. It will not phone a lender, pull a county record, or apply a credit you left blank. Send the calculator name, every input, and the result you expected through the contact page if you think the formula itself is wrong. Until that is settled, read $3,596.93 as the output of the fields above and nothing else.

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