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How to use NPV Calculator

Enter the initial investment, your discount rate and each year's cash flow. The calculator discounts them all and shows the project's Net Present Value.

Frequently asked questions

How is NPV calculated?

NPV sums each year's cash flow discounted to today: NPV = Σ CFt / (1 + r)^t, minus the initial outlay. A positive NPV means the project adds value.

What does a positive or negative NPV mean?

A positive NPV means the discounted returns exceed the cost, so the project is worth doing. A negative NPV means it destroys value at your required rate.

How do I choose a discount rate?

Use your required rate of return or cost of capital. A higher discount rate lowers NPV, reflecting greater risk or a higher opportunity cost of funds.

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