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Net Present Value Calculator

See whether an investment is worth it by turning its future cash into today's dollars at the return you need, then comparing that with what it costs.

Level: Grade 12 to college

Printable worksheet

Net Present Value Calculator

Know the answer you need? Pick an input to work backward.

Inputs

Net cash for period 1, 2, 3 … in order, separated by commas. Use a minus sign for a period with a net outflow.

The return you need for one period, or what your money costs you.

Each period is a

Result

Net present value (NPV)

$1,307.29

At 10% per year, the NPV is $1,307.29: the project earns more than the 10% required return.

Present value of the cash flows
$11,307.29
Undiscounted net cash flow
$4,000.00
Profitability index
1.1307
Discounted payback (years)
2.74
Internal rate of return (per year)
16.34%
Cumulative discounted cash flow
$0$500$1K$1.5K0123

Year

See the step-by-step solution ↓

Discounting each year's cash flow at 10%
Discounting each year's cash flow at 10%
YearCash flowDiscount factorPresent valueCumulative PV
0-$10,000.001-$10,000.00-$10,000.00
1$3,000.000.909091$2,727.27-$7,272.73
2$4,200.000.826446$3,471.07-$3,801.65
3$6,800.000.751315$5,108.94$1,307.29

Step-by-step solution

  1. Turn each future cash flow into today's dollars, since money later is worth less. Divide it by (1 + r)^k, where k is its year number and r = 10%

    $3,000.00 ÷ 1.1^1 = $2,727.27; $4,200.00 ÷ 1.1^2 = $3,471.07; $6,800.00 ÷ 1.1^3 = $5,108.94

  2. Add up what all the future cash flows are worth today

    $3,000.00(1+0.1)1+$4,200.00(1+0.1)2+$6,800.00(1+0.1)3=$11,307.29

  3. Subtract the initial investment, which is already in today's dollars

    $11,307.29−$10,000.00=$1,307.29

  4. Divide what the cash flows are worth today by the initial investment. This profitability index shows the value per dollar put in

    $11,307.29$10,000.00=1.1307

Test yourself

20 quick questions built from this calculator's formula: work out results, predict what happens when an input changes, and work backward from an answer. Every answer comes with the working.

Please note: Results are estimates for planning and comparison. Lenders, banks, and tax authorities may round differently or include fees not modeled here, so confirm figures with your provider before deciding.

How to solve this on a calculator

The keys to press to get this page's worked-example answer on an ordinary calculator, with what the display should show after each step. A named-model tab follows that calculator's official guidebook.

BA II Plus

Net present value with the BA II Plus cash flow worksheet

Problem
A project costs $10,000 today and returns $3,000, $4,200 and $6,800 at the end of the next three years. Your required return is 10% a year. What is the NPV?
Formula
NPV = CFo + C01 ÷ (1 + I/100) + C02 ÷ (1 + I/100)² + C03 ÷ (1 + I/100)³
Example values
CFo = −10,000 (initial cash flow (paid out, so negative)); C01, C02, C03 = 3,000; 4,200; 6,800 (cash flows at the end of years 1–3, each once (F = 1)); I = 10 (discount rate per period, percent). These are the fixed values from the worked example on this page, so the keys stay the same whatever you type into the calculator above.
Why the BA II Plus
Uneven cash flows don't fit the TVM keys; the BA II Plus's cash flow worksheet takes each one and computes NPV.
The whole sequence
CF2ND[CLR WORK]10000+|-ENTER↓3000ENTER↓↓4200ENTER↓↓6800ENTERNPV10ENTER↓CPT

Step by step

  1. CF2ND[CLR WORK]

    Press CF to open the cash flow worksheet, then 2ND [CLR WORK] to clear any cash flows left from before.

    Display: CFo=0.00 (our simulation; the guidebook doesn't show this screen)

  2. 10000+|-ENTER

    10000 +|- ENTER: the initial cost is paid out today, so CFo is negative.

    Display: CFo=-10,000.00

  3. ↓3000ENTER

    ↓ moves to C01, the first year's cash flow; 3000 ENTER.

    Display: C01=3,000.00

  4. ↓

    ↓ shows F01, how many times C01 happens in a row. It is 1, which is right, so leave it.

    Display: F01=1.00

  5. ↓4200ENTER

    ↓ to C02; 4200 ENTER.

    Display: C02=4,200.00

  6. ↓↓6800ENTER

    ↓ passes F02 (1, leave it), ↓ again to C03; 6800 ENTER.

    Display: C03=6,800.00

  7. NPV10ENTER

    NPV shows I, the discount rate per period. Key in 10 and press ENTER.

    Display: I=10.00

  8. ↓CPT

    ↓ shows NPV; CPT computes it: $1,307.29.

    Display: NPV=1,307.29

If your answer looks wrong

  • Sign convention: CFo is what you pay today, so it is negative (10000 +|- ENTER); the returns are positive. With CFo keyed in as +10000, CPT shows NPV=21,307.29, and IRR has no sign change to work with: Error 5.
  • P/Y and BGN don't apply here: I is the rate per cash flow period (10 for 10% a year), whatever P/Y is, and END/BGN doesn't affect this worksheet. Keying in .1 instead of 10 gives NPV=3,968.26. For monthly cash flows, key in the annual rate ÷ 12 as I.
  • Leave each F at 1 here. If F01 is set to 3, C01 counts for three years in a row and NPV=4,551.48.
  • Cash flows left from an earlier problem change the answer: press 2ND [CLR WORK] inside the CF worksheet first.
  • Decimals: these displays are at 2 decimal places. If yours shows more or fewer, check DEC with 2ND [FORMAT].

Checked against the official guidebook, pp. 2, 4, 37–38, 40–44, 79: BA II PLUS™ Calculator (guidebook) (English PDF, copyright © 2011–2025 Texas Instruments Incorporated (as printed on page ii)). Every key and setting above follows those pages; the instructions are written in our own words.

How this is checked: an automated test replays these keys on this site's simulation of the BA II Plus, built from that guidebook, checks every display along the way, and confirms the answer matches the calculator on this page (last checked 2026-10-19). It has not been tried on a physical BA II Plus. Displays are shown at 2 decimal places, the setting after a reset; the calculator's own display also has small status indicators that aren't shown here. Second functions are written in brackets: press the second-function key (2ND, or 2nd on some models), then the key with that name printed above it.

Calcapedia is independent and is not affiliated with or endorsed by Texas Instruments. TI and BA II Plus are trademarks of their owners and are used here only to say which calculator these steps are for.

What this calculator does

Find out whether an investment that pays you back over time is worth more than it costs. Net present value (NPV) answers that, after allowing for the return you could earn somewhere else. A dollar you get years from now is worth less than a dollar today, because today's dollar could be earning a return in the meantime.

So each future cash flow is shrunk back to today's dollars using your discount rate, the return you require. Those shrunken amounts are added up, and the cost you pay up front is subtracted. A positive NPV means the project beats your required return. A negative one means your money would do better in the other option.

Enter what you pay today and the net cash you expect at the end of each later period. The calculator gives the NPV with its working and the present value (today's value) of the cash flows. It also gives the profitability index and the discounted payback period. When there's exactly one, it shows the internal rate of return (IRR) too. A table shows every period's discount factor and the running total.

Where it's used

Why this math matters outside the classroom:

  • Capital budgeting. A finance team compares two machines by discounting each one's yearly savings at the company's 9% cost of capital.
  • Rental property analysis. An investor discounts five years of rent, net of costs, plus an expected sale price to judge an asking price.
  • Business school cases. Students show that $3,000, $4,200 and $6,800 over three years are worth $11,307.29 today at 10%.
  • Energy upgrades. A homeowner checks whether $1,200 a year of savings for 10 years justifies an $8,000 upgrade at a 6% discount rate.
  • Comparing job offers. Someone weighing a signing bonus against higher later pay discounts each year's difference to today's dollars.

How to use it

  1. Enter the initial investment you pay today as a positive number.
  2. List the net cash flow for each later period in order, separated by commas. Put a minus sign in front of any period where more money goes out than comes in.
  3. Enter the discount rate for one period. Then say whether the periods are years, quarters or months.
  4. Read the NPV and the steps. Then use the table to see how quickly the discounted cash flows earn back the investment.

What the inputs mean

Initial investment (paid today)
The cost paid at the very start (time 0). It isn't discounted, because it's already in today's dollars.
Cash flows, one per period
Net cash for each period: money in minus money out. The first number is the end of period 1, the second the end of period 2, and so on. Include any resale or scrap value in the last period.
Discount rate per period
The return you require for one period. That's often a company's cost of capital (what its money costs it), or the return on a similar investment. If the periods are months, enter a monthly rate.
Each period is a
This only changes the labels and the IRR description. The discount rate must match the period length you choose.

Formula and method

PV of cash flow k = CFₖ ÷ (1 + r)^k
NPV = −I + CF₁ ÷ (1 + r) + CF₂ ÷ (1 + r)² + … + CFₙ ÷ (1 + r)^n
profitability index = (NPV + I) ÷ I
discounted payback = last period with a negative running total + (shortfall ÷ next period's PV)

I is the initial investment. CFₖ is the net cash flow at the end of period k, and n is the last period. r is the discount rate per period, as a decimal (10% is 0.10). PV means present value, what a future amount is worth today.

Dividing by (1 + r)^k undoes k periods of growth. So each future amount becomes the sum you'd need to invest today, at rate r, to end up with it.

The profitability index compares the present value of what comes back with what goes in. Above 1 means the NPV is positive. The discounted payback is how long it takes for the running total of discounted cash flows to climb back to zero. Within the period where it turns positive, the calculator assumes the cash arrives evenly to find the exact point.

Spreadsheet NPV functions discount the first value in the range too. So they assume the first cash flow comes one period from now. This calculator keeps the initial investment at time 0, the usual textbook approach. In a spreadsheet, take the NPV of the later flows and subtract the initial investment to get the same answer.

Worked example

A project costs $10,000 today and returns $3,000, $4,200 and $6,800 at the end of the next three years. Your required return is 10% a year.

  1. Year 1: $3,000 ÷ 1.1 = $2,727.27.
  2. Year 2: $4,200 ÷ 1.1² = $4,200 ÷ 1.21 = $3,471.07.
  3. Year 3: $6,800 ÷ 1.1³ = $6,800 ÷ 1.331 = $5,108.94.
  4. Present value of the cash flows: $2,727.27 + $3,471.07 + $5,108.94 = $11,307.29.
  5. NPV: $11,307.29 − $10,000 = $1,307.29. Profitability index: $11,307.29 ÷ $10,000 = 1.1307.
  6. After year 2 the running total is −$3,801.65, and year 3 adds $5,108.94. So the discounted payback is 2 + 3,801.65 ÷ 5,108.94 ≈ 2.74 years. The IRR is about 16.34%.

Result: The NPV is $1,307.29: the project returns more than 10% a year, with a profitability index of 1.1307.

Understanding the result

A positive NPV is how much the project beats your required return, in today's dollars. In the example, the cash flows are worth $1,307.29 more today than the $10,000 they cost. So taking the project should leave you that much better off than investing at 10%.

An NPV of zero means the project earns exactly the discount rate, and that rate is its IRR. A negative NPV doesn't always mean you lose money in plain dollars. (The example's gain before discounting is $4,000 at any rate.) It means you'd have done better in the other option that earns the discount rate.

When you can pick only one of several projects, prefer the higher NPV. The profitability index helps when money is limited, because it shows the value created per dollar invested.

Assumptions and limitations

  • Each cash flow arrives at the end of its period, and the initial investment is paid at the start.
  • One discount rate applies to every period.
  • Cash flows are entered after any taxes and costs you want to count. The calculator doesn't add or remove taxes.
  • The answer is only as good as the cash flow forecasts and the discount rate, and both are estimates.
  • Risk is handled only through the discount rate. The calculator doesn't model ranges of outcomes or probabilities.
  • It doesn't model cash arriving mid-period, changing discount rates or inflation adjustments. Use inflation-adjusted (real) flows with an inflation-adjusted rate, or unadjusted flows with an unadjusted rate. Don't mix them.

Frequently asked questions

What discount rate should I use?

Use the return you could reasonably earn on another option with similar risk. Businesses often use their weighted average cost of capital, the blended cost of their loans and investors' money. They sometimes add extra for riskier projects. For a personal decision, the return on your next-best use of the money is a sensible start. Trying a few rates shows how much the decision depends on it.

Why doesn't my spreadsheet give the same NPV?

Most spreadsheet NPV functions treat the first value as arriving one period from now, and discount it. If you put the initial investment inside the function, the whole result is discounted one extra period. To match this calculator, put only the later cash flows inside the function. Then subtract the initial investment outside it.

How is NPV different from IRR?

NPV gives a dollar amount at a rate you choose. IRR gives the rate at which the NPV would be exactly zero. They agree on whether a single, ordinary project beats your required return. But NPV is the safer guide when comparing projects of different sizes. It's also safer when the cash flows switch between positive and negative more than once.

Can cash flows be negative after the first year?

Yes. Enter a negative number for any period when more money goes out than comes in, such as a major repair or an expansion. Negative flows are discounted the same way as positive ones, and they lower the NPV.

How this calculator is checked

Method: Standard discounted cash flow definition of net present value with end-of-period flows; profitability index as PV of future flows ÷ initial investment; IRR by bracketing and Brent's method (src/lib/finance/cashflow.ts), tested against Microsoft's documented NPV and IRR examples. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

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