NPV / IRR Calculator
Calculate Net Present Value and Internal Rate of Return for investment cash flows.
Period 0 first (initial investment, usually negative)
Results
NPV
$16,120
Accept project
IRR
16.62%
≥ hurdle rate
Payback period
2.86
periods
Total inflows
$150,000
5 periods
Cash flow table
| Period | Cash flow | PV |
|---|---|---|
| 0 | -$100,000 | -$100,000 |
| 1 | $30,000 | $27,273 |
| 2 | $40,000 | $33,058 |
| 3 | $35,000 | $26,296 |
| 4 | $25,000 | $17,075 |
| 5 | $20,000 | $12,418 |
NPV and IRR explained
Net Present Value (NPV) discounts all future cash flows back to today using the hurdle/discount rate. A positive NPV means the project creates value above the required return; a negative NPV means it destroys value. Internal Rate of Return (IRR) is the discount rate that makes NPV = 0. Accept a project if IRR exceeds the hurdle rate. Multiple IRRs can exist when cash flows change sign more than once. NPV is generally preferred over IRR for capital budgeting decisions.
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