Net Present Value (NPV) Calculator
Free online Net Present Value (NPV) Calculator that runs directly in your browser.
-
1Enter data
Enter content, paste text or load a file from disk. -
2Click the button
The tool will immediately process your data in the browser. -
3Get the result
Copy the finished text or save the file to your device.
return "Result ready in 0.1s";
}
Parametry Inwestycji
Performance Analysis
Enter the data on the left and click "Calculate" to see the financial analysis.
Rate this tool:
Related tools
Other tools you may find usefulNPV calculator - net present value of the investment
The NPV (Net Present Value) calculator is a tool that allows you to assess whether the planned investment project is profitable. Based on cash flows over time and the discount rate you choose, it calculates the actual value of your investment in today's money. Thanks to this, you can easily compare several design variants and choose the one that generates the greatest added value.
Run calculator See more financial tools
Formulas and theory
Definition of net present value (NPV)
Net present value (NPV) is the difference between the discounted revenues and costs of an investment project. In other words, it shows how much an investment is worth today, given that future cash flows are worth less than the funds currently available. The NPV formula is the basis for financial analysis of projects in business, energy, construction and IT.
NPV = Σ (CFt/ (1 + r)t) – I0
- CFt– cash flow in period t,
- r– discount rate (cost of capital),
- I0– initial investment outlay,
- t– period number (e.g. year 1, year 2…).
If NPV > 0 – the project is profitable. If NPV < 0 - the investment generates a loss relative to the cost of capital.
How to use the NPV calculator
Enter the initial investment amount, then the subsequent net cash flows for each period (e.g. years). Also determine the discount rate corresponding to the cost of capital (e.g. 8% per year). The calculator will automatically calculate the present value of each flow and then calculate the project's net present value (NPV).
The result shows how much the investment is worth in today's money. A positive NPV means that the project generates value above the cost of capital - i.e. it is worth implementing. A negative NPV means that the investment does not bring the expected rate of return.
Calculation examples
Example 1. Profitable investment
Data:I₀ = PLN 10,000, CF₁ = PLN 4,000, CF₂ = PLN 5,000, CF₃ = PLN 4,000, r = 10%.
Calculation:NPV = 4,000/(1.1) + 5,000/(1.1)² + 4,000/(1.1)³ – 10,000 = 3,636 + 4,132 + 3,005 – 10,000 = +PLN 773.
Conclusion:The project is profitable and generates positive value.
Example 2. Unprofitable project
Data:I₀ = PLN 20,000, CF₁ = PLN 5,000, CF₂ = PLN 6,000, CF₃ = PLN 7,000, r = 12%.
Result:NPV = 5,000/1.12 + 6,000/(1.12)² + 7,000/(1.12)³ – 20,000 = 4,464 + 4,782 + 4,984 – 20,000 = –PLN 1,770.
Conclusion:The project does not meet the expected return - it is not worth investing.
Example 3. Long-term infrastructure project
Data:I₀ = PLN 100,000, CF₁–₅ = PLN 30,000 per year, r = 8%.
Calculation:NPV = Σ(30,000 / (1.08)t) – 100,000 ≈ 30,000 × 3.993 – 100,000 = +PLN 19,790.
Conclusion:The project is profitable, a positive value indicates that revenues exceed the cost of capital.
Table - NPV interpretation
| NPV | Interpretation | Investor's action |
|---|---|---|
| NPV > 0 | The project brings profit above the cost of capital | Accept the investment |
| NPV = 0 | The project covers only the cost of capital | Neutral result |
| NPV < 0 | The project brings a loss compared to the expected return | Reject the investment |
NPV – what is it and how to interpret the result?
NPV (Net Present Value) answers the question:how much today's zlotys is the entire investmentworth, taking into account that the money received in the future is worth less than the same money today. Each future cash flow CFtis discounted at the rate r: NPV = Σ CFt/ (1 + r)t− initial outlay.The discount ratereflects the cost of capital and the risk of the project - the riskier the project, the higher the rate should be used.
The interpretation is clear:NPV > 0means that the project creates value above the required rate of return and is worth implementing;NPV = 0– the project exactly covers the cost of capital;NPV < 0– the project destroys value, even if it generates an accounting profit. Example: expenditure PLN 100,000, flows PLN 40,000 per year for 3 years, interest rate 10%. Present value of flows: 40,000/1.1 + 40,000/1.21 + 40,000/1.331 = 36,364 + 33,058 + 30,053 = PLN 99,475, so NPV = −PLN 525 - the project is on the verge of profitability and at a 10% interest rate it should not be accepted, although nominally "earns" PLN 20,000.
NPV and IRR – which indicator to choose?
IRR (internal rate of return) is the discount rate at which the NPV is zero - it shows the percentage "profitability" of the project, which is easy to compare with the cost of capital. Both indicators usually lead to the same conclusions, but when comparing mutually exclusive projects or with non-standard flows (changing the sign more than once), IRR may be misleading - then NPV should be decisive, because it measures the value in PLN, not in percentage. In practice, analysts provide both: NPV as a decision criterion, IRR as a convenient measure of the margin of safety.
FAQ – frequently asked questions
Why is NPV so important in investment analysis?
Because it allows you to compare projects with different durations and different flows, bringing all values to a common denominator - the current value of money.
Does NPV take into account risk?
Indirectly, yes. The risk is captured in the amount of the discount rate - the higher the risk, the higher r, which lowers the NPV.
What does negative NPV mean?
Indicates that the project does not generate enough value to cover the cost of capital. In practice, it is not profitable to implement it.
Is it possible to compare the NPV of different projects?
Yes, this is one of the main uses of NPV - selecting the project with the highest net present value among several alternatives.
How to choose the right discount rate?
The most common assumption is the cost of capital (WACC) or the rate of return expected by the investor. A higher rate is used for riskier projects.
Summary
The NPV calculator is one of the most important tools for assessing the profitability of investment projects. It allows you to easily check whether a given investment generates added value for the investor or whether it is better to abandon it. The NPV result indicates the real value of future cash flows after taking into account the cost of capital. Check your projects with thewebp.plNPV calculator and make financial decisions based on hard data.