NPV Calculator
Calculate net present value (NPV) of a project or investment at any discount rate. See whether future cash flows justify the initial outlay.
Net present value
₹2,26,795
Positive — the project adds value
Undiscounted cash flow
₹2,60,000
PV of future flows
₹1,26,795
At 10% discount rate
A positive NPV means the project earns more than the discount rate after accounting for the time value of money. At 10%, four yearly inflows of ₹40,000 against a ₹1,00,000 outlay give an NPV of ₹26,795.
Last updated: August 2026
How this calculator is verified
Checked by True Calculator automated test suite on
- Formula verified against a published worked example in the automated test suite
- Edge cases (zero, negative, boundary and unit-mismatch inputs) covered by unit tests
The full verification method is on our how we verify page. Found an error? Tell us and we will re-check it.
When to Use This Calculator
NPV is the decision rule for any money-out-now, money-in-later proposition. Small business owners evaluating equipment, shop fit-outs or delivery fleets use it against the bank FD or mutual fund return they would otherwise earn. Real estate investors compare rental properties by the NPV of expected rent minus maintenance at their target return. Companies appraising expansion projects, distributors taking on new brands, and even students analysing case-study investments all reach for NPV because it converts scattered future cash flows into one today's-rupee figure. The same logic applies to personal decisions: buying a car for cash versus investing the money, solar panel installation versus grid power bills, or a lump-sum FD versus staggered deposits. Whenever the question is 'is this worth my money at my required return?', NPV answers it in the most direct currency there is — rupees today.
How to Use This Calculator
- Step 1: Enter the discount rate — your required return or cost of capital as a percentage.
- Step 2: Enter the initial investment as a negative amount, since it is money going out at year zero.
- Step 3: Enter each expected yearly cash flow as a positive amount.
- Step 4: Read the NPV — positive means the project clears your required return; negative means it does not.
Worked Example
A Pune café owner wants to invest ₹1,00,000 in new equipment expected to return ₹40,000 per year for 4 years. Using a 10% discount rate — what the money could earn in a diversified fund — the calculator returns an NPV of ₹26,795. The undiscounted cash flow of ₹60,000 flatters the deal, but after discounting future rupees the present value of the four inflows is ₹1,26,795 against the ₹1,00,000 outlay. Because the NPV is positive, the equipment earns more than the 10% alternative.
Tips and Common Mistakes
- •Tip 1: Enter the initial outlay as a negative number or the present value will be overstated.
- •Tip 2: Use the same discount rate across competing projects so the comparison is fair.
- •Tip 3: Combine NPV with IRR — NPV shows value in rupees, IRR shows the return as a percentage.
- ✗Mistake 1: Using the average inflation rate as the discount rate — use the return you could actually earn on similar-risk alternatives.
- ✗Mistake 2: Entering optimistic cash flows you have not stress-tested; a small change in year-4 cash flow swings NPV sharply.
Frequently Asked Questions
What does a positive NPV tell me?
A positive NPV means the project earns more than your discount rate after accounting for the time value of money. At 10% discounting, a project with an NPV of ₹26,795 adds that much value in today's rupees beyond the 10% hurdle rate.
Which discount rate should I use for NPV?
Use the opportunity cost of capital — the return you could earn on a similar-risk alternative. For business projects, WACC is the standard choice; for personal investments, your expected return from mutual funds or FDs works.
Is NPV better than IRR for choosing projects?
For mutually exclusive projects, NPV is more reliable because it shows actual value added in rupees, while IRR only gives a percentage and can be misleading with irregular cash flows. Many Indian project appraisals use both together.
Can NPV be negative while the project still makes accounting profit?
Yes. Accounting profit ignores when money arrives, while NPV discounts future flows. A project that looks profitable on paper may fail to clear your discount rate, especially if profits come late in the project's life.
How do I enter the initial investment?
Enter it as a negative amount in the initial investment field, because it is an outflow at year zero. Future inflows are positive. The calculator discounts each year's flow at the rate you provide.
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