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NPV = Σ CFₜ ÷ (1 + r)ᵗ

NPV and IRR calculator

Paste a cash-flow series — negative at the start, positive afterwards — and a discount rate to get net present value, IRR and discounted payback.

Commas or spaces. Period 0 is the investment, so it is usually negative.

Short answer: ₹10,00,000 invested today and ₹4,00,000 / ₹5,00,000 / ₹6,00,000 over the next three years has an NPV of about ₹2,27,600 at a 10% discount rate, and an IRR near 21%. Both say the project clears a 10% hurdle; only the NPV says by how much in rupees.

What the two numbers are for

NPV answers "how much value does this add at my cost of capital?" and is measured in money, so two projects can be compared by adding. IRR answers "what return does this project earn?" and is a rate, so it ignores how large the project is. A project can have a great IRR and a small NPV — that is a small project, not a good one.

Worked example

A machine costs ₹5,00,000 and saves ₹1,80,000 a year for four years at a 12% cost of capital. The present values are 1,60,714 + 1,43,495 + 1,28,120 + 1,14,393 = ₹5,46,722, so NPV = ₹46,722 and IRR ≈ 16.3%. Both tests pass; the NPV is the number to quote in the proposal.

Convention. The first flow is at period 0 and is not discounted, matching every textbook and spreadsheet. Flows are treated as arriving at period end.

NPV and IRR questions

What is the NPV formula?

NPV = Σ CFₜ ÷ (1 + r)ᵗ, where the first flow sits at t = 0 and is not discounted. A positive NPV means the project returns more than the discount rate you chose; a negative one means it does not.

How is the IRR found?

It is the discount rate that makes the NPV exactly zero. This page finds it by bisection between −99.9% and 1000% per period: bisection cannot diverge the way Newton’s method can, and every answer is reproducible to the tolerance shown.

Why does the IRR say “no rate” sometimes?

When the cash flows never recover the investment there is no rate that brings the NPV to zero, because every sign of the NPV stays negative. The page says so rather than printing a meaningless number.

NPV or IRR — which should I use?

NPV for choosing between projects, because it is measured in money and adds up; IRR for communicating a return and comparing against a cost of capital. IRR ignores scale: a 40% return on ₹10,000 is not better than 25% on ₹10,00,000.

Related tools

Payback period calculatorHow long until the investment is recovered.Loan amortization scheduleMonth-by-month interest and principal.CAGR calculatorAnnualise a return over time.