What this calculator helps you do
Discount future cash flows to the present and combine them with the initial cash flow. The calculation runs entirely in your browser; SENNA Finance does not receive the values entered into this tool.
Worked example
Using the default example—discount rate of 10%, initial investment of $-10,000, year 1 cash flow of $2,500, year 2 cash flow of $3,000, year 3 cash flow of $3,500—the calculator returns net present value of $1,430.07; discount rate: 10.00%; total undiscounted cash flow: $5,200.00. Change the assumptions to match your own case rather than relying on the example.
Formula and calculation basis
Inputs are converted to the periodic units required by the formula. Results are calculated with full JavaScript numeric precision and rounded only for display.
How to interpret the result
A positive NPV means the modeled cash flows exceed the entered required return in present-value terms. Compare projects using consistent timing and risk assumptions.
Common mistakes to avoid
- Mixing monthly cash flows with an annual discount rate.
- Using nominal cash flows with a real discount rate, or vice versa.
- Ignoring projects of different scale and risk.
Limits and assumptions
Cash flows are assumed to occur at equally spaced period ends. Forecast uncertainty is not modeled.
Outputs are estimates, not contractual quotations, regulated disclosures, tax advice, investment advice, or a substitute for professional review.
Frequently asked questions
What does a positive NPV mean?
Under the assumptions, present value exceeds the initial outlay and required return.
Should the initial investment be negative?
Usually yes, because it represents a cash outflow at period zero.
How is NPV different from IRR?
NPV measures value in currency; IRR reports the break-even discount rate.
Sources and reference context
External references provide educational context and do not imply endorsement of SENNA Finance.