NPV & IRR Calculator
Paste a cash flow series and get net present value, internal rate of return, discounted payback period, and a profitability index, with a sensitivity table showing how NPV moves with the discount rate.
How do I calculate NPV and IRR?
Net present value discounts every future cash flow back to today at your cost of capital and sums them, including the initial outflow. A positive NPV means the investment creates value at that discount rate. Internal rate of return is the discount rate at which NPV equals zero: the effective annual return the project earns. NPV is the more reliable decision rule of the two, because IRR misbehaves whenever cash flows change sign more than once.
How to use this tool
- 1
Paste the cash flow series
One value per period, starting with the initial investment as a negative number.
- 2
Set the discount rate
Your cost of capital or required return: this is the assumption the whole answer rests on.
- 3
Read NPV, IRR, and payback
Plus a profitability index and a sensitivity table showing NPV across a range of discount rates.
IRR is the number people quote and the weaker rule
IRR is intuitive and widely misused. Four situations where following it produces the wrong decision.
Multiple sign changes, multiple IRRs
A project whose cash flows go negative, positive, then negative again can have more than one mathematically valid IRR. The calculator returns one of them, and nothing indicates the others exist.
IRR ignores scale
A project returning 60% on $10,000 has a higher IRR than one returning 25% on $2,000,000, and creates a tiny fraction of the value. NPV captures the difference; IRR cannot.
The reinvestment assumption
IRR implicitly assumes interim cash flows are reinvested at the IRR itself, which is usually optimistic. For a project showing 45%, that assumes you have somewhere else returning 45% to put the money.
The discount rate carries the answer
NPV is highly sensitive to the discount rate, and the rate is a judgement rather than an observation. Always test a range rather than presenting a single figure as though it were precise.
The model is only as good as the cash flows
The arithmetic here is exact. The inputs are not. Every NPV rests on forecast cash flows that embed assumptions about volume, pricing, cost inflation, and timing, and the sensitivity of the answer to those assumptions usually matters more than the answer itself. Building that view means grounding the forecast in your actual historical performance rather than a planning spreadsheet, which is a different exercise from discounting a series someone handed you.
See how DataWyse answers thisQuestions finance teams ask about this tool
What is the difference between NPV and IRR?
NPV tells you how much value an investment creates in today's currency at a given discount rate. IRR tells you the effective annual return it earns. NPV is the better decision rule because it accounts for scale and handles unusual cash flow patterns correctly, while IRR is more intuitive to communicate.
What discount rate should I use?
Your weighted average cost of capital for a project with typical risk, adjusted upward for anything materially riskier than the existing business. Because the answer is so sensitive to this input, present NPV across a range rather than at a single rate.
What does a negative NPV mean?
That the investment does not return your required rate: it destroys value at that discount rate. It does not necessarily mean the project loses money in cash terms; it means the money would earn more elsewhere at the same risk.
Why can a project have more than one IRR?
Because IRR is the root of a polynomial, and a cash flow series that changes sign more than once can have several valid roots. Any project with a later reinvestment or decommissioning cost is exposed to this, and it is the main reason NPV is the safer decision rule.
What is the profitability index?
The present value of future cash flows divided by the initial investment. Above 1.0 the project creates value. It is useful for ranking projects when capital is constrained, because it expresses value created per unit of capital rather than in absolute terms.
Is this tool really free?
Yes. No signup, no email required, no usage limit. It runs entirely in your browser: nothing you type is uploaded to a server or stored anywhere. We build these because the people who find them useful are the people who eventually need a financial analyst that works the same way.
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