NPV Calculator - Net Present Value

Enter cash flows and period schedules

Begin by defining your cash flow timeline. Period 0 represents your initial capital outlay (which must be input as a negative value, representing an cash outflow). Add subsequent periods representing annual or monthly cash inflows (positive values). For dated projects, supply the exact calendar date for each cash flow event to capture irregular spacing.

Select compounding and timing parameters

Define your discount rate (e.g. WACC) to assess project feasibility. Select the discounting timing: End of Period assumes cash flows occur at the end of each period, while Beginning of Period discounts flows immediately.

Scenario cash flow inputs

Capital budgeting relies on sensitivity bounds. In the left panel, you can independently configure the cash flows for Bull (upside), Base (expected), and Bear (downside) parameters. The inputs are isolated in separate scenario scopes to prevent data cross-contamination during active modeling.

Present value outputs comparison

The Scenario Comparison Card maps the calculated NPV of each profile side-by-side. Inspecting the differences in net present values relative to the hurdle rate highlights whether downside events (Bear) will drop the project below its required capital cost threshold.

Timing conventions: End vs Beginning of period

Under End of Period, cash flows occur at the end of each period, so Year 1 FCF is discounted by 1 period. Under Beginning of Period, cash flows occur immediately, meaning Year 1 flows are discounted by 0 periods. Excel defaults to End of Period timing.

Hurdle rate vs NPV sensitivity matrix

The 5x5 sensitivity matrix automatically cross-references the Hurdle Discount Rate against different compounding assumptions. This grids WACC adjustments (vertical) against discounting frequency (horizontal), calculating the resulting NPV at each intersection.

How timing shifts absolute present values

Receiving cash flows earlier preserves capital value because of discounting compounding over time. Consequently, Beginning of Period timing yields higher present values compared to End of Period timing under identical cash inflow quantities.

Example cash flow assumptions

To demonstrate the Net Present Value calculation, let's analyze an investment with a 3-year forecast:

• Initial Outlay (Year 0) = -$100,000 (Cash Outflow)
• Year 1 Cash Inflow = $40,000
• Year 2 Cash Inflow = $50,000
• Year 3 Cash Inflow = $30,000
• Hurdle Discount Rate (WACC) = 10.00%

Step-by-step present value discounting

First, calculate the discount factors at 10%: Year 1 = 0.90909; Year 2 = 0.82645; Year 3 = 0.75131.

Discount the cash inflows: PV of Year 1 = $36,364; PV of Year 2 = $41,322; PV of Year 3 = $22,539.

Sum the present values and deduct outlay: NPV = -$100,000 + ($36,364 + $41,322 + $22,539) = -$100,000 + $100,225 = +$225. The project adds $225 in present value and is marginally viable.

Intrinsic value creation vs capital destruction

A positive NPV indicates the project will generate cash inflows exceeding its hurdle funding cost, creating net wealth for shareholders. A negative NPV indicates the project is value-destructive on a present-value basis and should be rejected.

NPV vs IRR for competing projects

When comparing mutually exclusive projects, NPV and IRR can sometimes yield conflicting results due to reinvestment rate assumptions. In such cases, NPV is the preferred metric as it measures absolute wealth creation in currency units rather than percentages.