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Fifty thousand in, 15,000 a year for five years
The outlay is 50,000. Each year pays 15,000 of net cash for five years. The discount rate is 8 percent. The present value of those five inflows is 59,890.65.
Project outlay: 25% lower
Change project outlay to 37,500 while keeping the other example values the same.
Project outlay: 25% higher
Change project outlay to 62,500 while keeping the other example values the same.
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Quick answer
What does the Project net present value calculate?
What is this project worth in today’s dollars after discounting the cash inflows? This calculator uses project outlay, annual net cash inflow, years of inflows, and annual discount rate to estimate today’s value after discounting the inflows immediately in your browser.
With the values currently entered, the result is $9,890.65 — net present value. It also shows present value of inflows, undiscounted total inflows, project outlay, and discount rate.
How to use the Project net present value
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Project outlay
- Annual net cash inflow
- Years of inflows — entered in years
- Annual discount rate — entered in %
Project net present value formula
PV of inflows = annual inflow × [1 − (1+r)^(−n)] ÷ r. NPV = that present value − outlay. At a 0% rate the present value is inflow × years.
Assumptions
- Investor.gov writes compound interest as FV = PV × (1+r)^n. This page inverts that for each year’s inflow, then subtracts the outlay.
- The inflow is the same at the end of each year. Tax, inflation inside the rate, residual value, and extra outlays later are excluded.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
A plain-language definition of interest earned on principal and accumulated interest.
Future valueInvestor.gov — US Securities and Exchange CommissionScope: General investor education; US sourceSEC glossary: future value is the value of an asset at a specified date in the future. Equal deposits grow by compound interest on each payment.
Simple and discounted paybackUS Department of EnergyScope: Federal life-cycle cost guidance; method is generalDefines the payback period as the years just sufficient for initial investment costs to be offset by cumulative annual savings. Simple payback does not discount those savings.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Project net present value example and edge cases
Net present value discounts each year’s cash inflow, adds those present values, and subtracts the outlay. Investor.gov writes compound interest as FV = PV × (1+r)^n. This page runs that backward on a repeating annual inflow.
Example: Fifty thousand in, 15,000 a year for five years
The outlay is 50,000. Each year pays 15,000 of net cash for five years. The discount rate is 8 percent. The present value of those five inflows is 59,890.65.
- Project outlay
- 50,000
- Annual net cash inflow
- 15,000
- Years of inflows
- 5 years
- Annual discount rate
- 8 %
Calculated result$9,890.65net present value
NPV is 9,890.65. Undiscounted inflows add to 75,000. The gap between 75,000 and 59,890.65 is the time-value haircut at 8 percent.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read NPV first. A positive figure means the discounted inflows cover the outlay at the rate you typed.
- A higher discount rate cuts today’s value. You are saying later cash is worth less because you could earn more elsewhere.
Edge cases worth checking
The rate already includes inflation
Keep the cash and the rate on the same basis. Real cash with a nominal rate mixes two pictures. Pick one and stay there.
Year five includes a sale of the asset
This page uses one repeating inflow. Fold the sale into that last year’s cash by hand, or run the present-value calculator on the sale and add it to this NPV.
What changes the result most
Project outlay
Use a current amount for project outlay. Include fees or recurring costs that belong in the same figure.
Annual net cash inflow
Use a current amount for annual net cash inflow. Include fees or recurring costs that belong in the same figure.
Years of inflows
Keep years of inflows on the same time basis as the other inputs. Monthly and annual values are easy to mix up.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Project outlay: 25% lower
37,500$22,390.65net present value
Project outlay: 25% higher
62,500-$2,609.35negative net present value
Annual net cash inflow: 25% higher
18,750$24,863.31net present value
Common mistakes
Check project outlay
Investor.gov writes compound interest as FV = PV × (1+r)^n. This page inverts that for each year’s inflow, then subtracts the outlay. Make sure this matches the number you enter.
Keep annual discount rate consistent
The inflow is the same at the end of each year. Tax, inflation inside the rate, residual value, and extra outlays later are excluded. Use the same units and time period throughout the calculation.
Do not rely on one project net present value scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What is this project worth in today’s dollars after discounting the cash inflows?
It does not replace a quote, contract, accountant, or local employment guidance.