Net Present Value (NPV) Calculator
NPV tells you whether an investment creates or destroys value. Enter your discount rate and projected cash flows to find if a project is worth pursuing.
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What should I know about NPV Formula?
NPV = -Initial Investment + CF₁/(1+r) + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ. A positive NPV means the investment creates value above the hurdle rate. A negative NPV means it destroys value — you'd be better returning the money to investors or finding an alternative.
What do I need to know about Choosing a Discount Rate?
For personal decisions, use your opportunity cost (e.g. 7% for stock market returns). For business decisions, use the Weighted Average Cost of Capital (WACC). A higher discount rate makes future cash flows worth less today — a critical insight for long-term projects.
What's the difference between NPV and IRR?
IRR (Internal Rate of Return) is the discount rate that makes NPV = 0. It's the true return of the investment. Compare IRR to your hurdle rate — if IRR > hurdle rate, proceed. NPV is generally more reliable when comparing projects of different sizes.
When to Seek Financial Advice?
Calculator results provide estimates based on stated inputs and should not replace professional financial advice for significant decisions. Free, regulated financial guidance is available through MoneyHelper (moneyhelper.org.uk, 0800 011 3797) for general money queries. Regulated independent financial advisers (IFAs) — find one at unbiased.co.uk — provide personalised advice on mortgages, pensions, investments, and insurance. Advice fees are typically £150-350 per hour or a percentage of assets under management, usually around 1-2% annually. For smaller, one-off decisions, free and impartial guidance is available from MoneyHelper (moneyhelper.org.uk), a government-backed service — a good first stop before paying for full advice.