NPV & IRR Calculator

Work out the Net Present Value and Internal Rate of Return of a series of cash flows — for investments, projects or business decisions.

Initial Investment & Discount Rate

Initial Investment (Year 0 outflow)

Discount Rate (for NPV)

Future Cash Flows

Net Present Value (NPV)

$14,648

Internal Rate of Return (IRR)

15.35%

Positive NPV — at a 8% discount rate, this is expected to add $14,648 of value in today’s dollars.

How this works: NPV discounts every future cash flow back to today's value using your discount rate, then subtracts your initial investment — a positive NPV means the cash flows are worth more than the cost, in today's dollars. IRR is the discount rate at which NPV would equal exactly zero; it's solved numerically and requires at least one sign change in your cash flows (an outflow followed by inflows, or similar) to exist. If your cash flows never change sign, IRR can't be calculated and will show as N/A.

📈 Worked Examples — See What This Calculator Can Do

Three real-world style decisions. Type each set of numbers into the fields above and you’ll get exactly these results. NPV is the value created in today’s dollars; IRR is the annual return you compare against your required return (the discount rate).

☕ 1. Opening a new coffee shop

Input	Value
Initial investment	$250,000
Net cash flow, Years 1–5	$55k, $70k, $80k, $90k, $110k
Discount rate	10%

Result: NPV = $47,729 · IRR = 16.4%. The shop is expected to add almost $48k of value in today’s money, and its 16.4% return clears the 10% required return comfortably — financially attractive.

🏭 2. Replacing an old machine

Input	Value
Initial investment (machine + install)	$540,000
Annual savings, Years 1–5	$120k, $130k, $140k, $145k, $160k
Residual value (added to Year 5)	$50,000 → Year 5 = $210k
Discount rate	10%

Result: NPV = $11,143 · IRR = 10.7%. A genuine borderline call — the IRR only just beats the 10% hurdle. The savings do justify the spend, but with little margin for error, so it’s worth pressure-testing the assumptions before committing.

🚀 3. Launching a new product

Input	Value
Upfront investment	$800,000
Forecast cash flow, Years 1–5	$180k, $260k, $330k, $390k, $420k
Discount rate	12%

Result: NPV = $289,044 · IRR = 23.8%. A 23.8% return, well above the 12% required return, and nearly $290k of value created — the numbers strongly support the launch.

What NPV and IRR tell you

Net Present Value (NPV) values an investment by adding up all the cash it will produce in the future, each discounted back to what it is worth in today’s money, then subtracting the upfront cost. A positive NPV means the investment is expected to create value.

Internal Rate of Return (IRR) is the annual return the investment implies — the discount rate at which NPV would equal exactly zero. You compare it against your required return (the discount rate): clear it comfortably and the numbers support going ahead.

The formula

NPV = sum of each year’s cash flow ÷ (1 + r)^year, minus the initial investment, where r is the discount rate. IRR is the value of r that makes NPV equal zero, solved numerically.

Worked example

Item	Value
Initial investment	$250,000
Cash flow, Years 1–5	$55k, $70k, $80k, $90k, $110k
Discount rate	10%
NPV	$47,729
IRR	16.4%

Frequently asked questions

What does a positive NPV mean?

It means the discounted value of the future cash flows is greater than the cost, so the investment is expected to add value in today’s dollars.

What is a good IRR?

A good IRR is one comfortably above your required return (the discount rate). If your hurdle is 10% and the IRR is 16%, the investment clears it with room to spare.

Why can IRR sometimes not be calculated?

IRR needs at least one change of sign in the cash flows (an outflow followed by inflows). If the cash flows never change sign, no IRR exists and it will show as N/A.