NPV and IRR Calculator
Whether a project creates value at your required return, the rate it actually earns, and how long until it pays back.
At a 10% required return, this project adds $16,987 of value today. Accept it on these numbers.
NPV discounts every future dollar back to today and subtracts the cost. IRR is the discount rate that makes NPV exactly zero, so a project is attractive when its IRR exceeds your required return. IRR can be undefined or ambiguous when cash flows change sign more than once, which is why NPV is the more reliable decision rule.
Net present value discounts every future cash flow back to today and subtracts the upfront cost. A positive NPV means the project earns more than your required return and creates value; a negative NPV means it does not. The discount rate is the hurdle: your cost of capital, or the return available from the next best use of the money.
Frequently asked questions
Should I use NPV or IRR?
NPV when they disagree. IRR is easier to communicate but ignores scale: a small project with a 40% IRR can create less value than a large one at 15%. NPV measures dollars of value created, which is what actually matters.
What discount rate should I use?
Your weighted average cost of capital for a company decision, or your expected return from comparable alternatives for a personal one. Higher risk justifies a higher rate, which penalizes distant cash flows more heavily.
What is the payback period?
How long until cumulative cash flow turns positive. It is a rough liquidity check rather than a value measure, since it ignores everything after payback and, in its simple form, the time value of money. The discounted version fixes the second problem.
Why does IRR sometimes have no answer?
Bisection needs the cash flows to cross zero. If every flow is positive or every flow is negative, no rate makes NPV zero. Flows that alternate sign several times can produce multiple valid IRRs, which is another reason to rely on NPV.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.