NPV Calculator
Calculate Net Present Value for investment decisions with comprehensive cash flow analysis and sensitivity testing.
Investment Parameters
Upfront capital required
Cost of capital or required rate of return
Residual value at project end
Cash Flow Projections
NPV Analysis Results
Net Present Value
INR 4,58,026
Value-adding investment
IRR
27.1%
vs 12% required
Profitability Index
1.46
Profitable
Payback Period
3 years
Discounted Payback
4 years
Investment Decision
Recommended
Decision Criteria Summary
Cash Flow Analysis
Present Value Breakdown
| Year | Cash Flow | Discount Factor | Present Value | Cumulative PV |
|---|---|---|---|---|
| 0 | INR -10,00,000 | 1.000 | INR -10,00,000 | INR -10,00,000 |
| 1 | INR 3,00,000 | 0.893 | INR 2,67,857 | INR 2,67,857 |
| 2 | INR 3,50,000 | 0.797 | INR 2,79,018 | INR 5,46,875 |
| 3 | INR 4,00,000 | 0.712 | INR 2,84,712 | INR 8,31,587 |
| 4 | INR 4,50,000 | 0.636 | INR 2,85,983 | INR 11,17,570 |
| 5 | INR 6,00,000 | 0.567 | INR 3,40,456 | INR 14,58,026 |
Sensitivity Analysis
NPV Sensitivity to Discount Rate Changes
-20%
-8%
INR 17,91,792
-10%
2%
INR 9,66,625
+0%
12%
INR 4,58,026
+10%
22%
INR 1,26,465
+20%
32%
INR -99,995
Real NPV
Inflation-adjusted
INR 7,53,184
Risk-Adjusted NPV
With risk premium
INR 3,80,517
Download Results
Download saves a text file with all your calculation results
Make Smarter Investment Decisions with NPV
Use your NPV results to evaluate investment opportunities, estimate profitability, and choose projects that can generate stronger long-term returns.
Positive NPV generally indicates a potentially profitable investment opportunity.
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Understanding Net Present Value (NPV)
Net Present Value (NPV) is one of the most important financial metrics used to evaluate investments, business projects, and future cash flows. It helps determine whether an investment is profitable after considering the time value of money.
In simple terms, NPV compares the current value of future cash inflows with the initial investment cost. A positive NPV means the investment may generate profit, while a negative NPV indicates the project may not be financially attractive.
Initial Investment
The upfront amount invested in a project or business opportunity. This is usually shown as a negative cash flow at the beginning.
Future Cash Flows
Expected future income generated from the investment over time. Higher and stable cash flows improve NPV.
Discount Rate
Represents inflation, investment risk, and opportunity cost. Higher discount rates reduce present value of future cash flows.
Example of NPV Calculation
Suppose you invest ₹5,00,000 in a business project and expect annual cash inflows of ₹1,50,000 for 5 years with a 10% discount rate. If the calculated NPV is positive, the investment may generate returns higher than your required rate of return.
Why NPV is Important in Investing
NPV is widely used in corporate finance, stock market analysis, startups, and capital budgeting because it considers both profitability and time value of money.
Investors and businesses use NPV to compare multiple investment opportunities and choose projects that generate the highest long-term value.
Unlike simple profit calculations, NPV adjusts future cash flows to today's value, making it a more realistic method for financial decision-making.
NPV Investment Decision Rules
- Positive NPV generally indicates a profitable investment.
- Negative NPV may suggest the project is financially weak.
- Higher discount rates reduce NPV values.
- Long-term cash flows become less valuable due to inflation.
- NPV helps compare different business or investment projects.
- Used extensively in real estate, startups, and capital investments.
While NPV is a powerful metric, it should also be combined with other financial indicators like IRR, Payback Period, and ROI before making major investment decisions.
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