NPV & IRR Calculator
Calculate Net Present Value and Internal Rate of Return from an initial investment, a discount rate, and a series of future cash flows.
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Future Cash Flows (one per period)
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Net Present Value (NPV)
$3,116.41
Internal Rate of Return (IRR)
20.50%
How the NPV & IRR Calculator Works
Enter your initial investment (the cash you put in today), a discount rate, and each future period's expected cash flow. Net Present Value (NPV) discounts every future cash flow back to today's dollars and subtracts the initial investment, telling you whether a project creates value at your chosen discount rate. Internal Rate of Return (IRR) is the discount rate at which NPV would equal exactly zero — the break-even return of the investment.
IRR is found with a bisection search: the calculator repeatedly narrows a range between −99% and 1,000% until it lands on the rate that makes NPV cross zero, converging to a precise answer within about 100 iterations.
Example
A $10,000 initial investment returning $3,000, $4,000, $5,000, and $4,000 over four years, discounted at 8%, produces a positive NPV — meaning the project is expected to earn more than an 8% return — and an IRR somewhere above 8%, the effective annualized return the cash flows themselves imply.
Common Use Cases
- Deciding whether a capital project or investment clears your minimum required return.
- Comparing two projects with different cash flow timing on equal footing.
- Finding the effective annualized return implied by an irregular series of cash flows.
FAQs
- What does a negative NPV mean? A negative NPV means the investment is expected to return less than your discount rate — in other words, the future cash flows aren't worth more than what you put in, once discounted back to today.
- Why might IRR not be calculable? If the cash flow series never actually flips from a net negative present value to a net positive one anywhere in the −99% to 1,000% search range, there is no rate in that range where NPV crosses zero, so IRR can't be determined.
- Should I use NPV or IRR to decide between two projects? NPV is generally considered the more reliable metric for ranking projects since it reflects total dollar value created, while IRR can sometimes be misleading when comparing projects of very different sizes or cash flow timing.