How this calculation works
Discount every amount according to its year index, preserving its sign. The first amount occurs now and is not discounted. Add the positive and negative present values to find the net result.
NPV = Σ CFt/(1+r)^t, beginning at t=0A worked example
An outflow of ₹1,000 now and inflows of ₹600 at each of the next two year ends have NPV about ₹41.32 at a 10% effective annual discount rate.
Good to know
Equal annual intervals, not exact calendar dates. The entered rate is an assumption. Keep nominal/real and currency conventions consistent; no tax or probability model is added. Negative later cash flows are retained.
Reference: OpenStax: net present value method (opens in a new tab) ↗
Time zero is a different cash-flow position
The first number is paid or received now. The next number belongs to the end of year one, then year two and so on. An initial outflow of −1,000 and two later inflows of 600 produce three distinct timing positions, not three equally delayed receipts.
At a 10% effective annual discount rate, the later inflows are worth 600/1.1 and 600/1.1² today. Adding the initial −1,000 leaves NPV approximately ₹41.32. The undiscounted net total is ₹200, which answers a different question.
The present value calculator discounts a single future amount; this annual cash flow NPV adds an entire signed stream on one consistent time basis.
Keep signs and rate assumptions consistent
Choose one perspective and retain it throughout: money paid out is negative and money received is positive. Negative later amounts are allowed here and remain in the calculation. The result does not silently discard a maintenance cost or final liability.
The conventional cash flow IRR calculator solves a rate only for a restricted sign pattern. The uneven cash flow payback calculator focuses on recovery timing instead of the entire discounted net value.
The discount rate is part of the scenario
A discount rate represents your chosen time-value or opportunity-cost assumption. Changing it changes the result. A positive NPV is conditional on both the rate and the cash flows; it is not proof of a certain investment payoff.
This page uses equally spaced years, not actual dates. Keep inflation treatment consistent: nominal cash flows should match a nominal discount basis, while real cash flows need an appropriate real basis. Do not mix currencies without a justified conversion process.
A few questions, answered
Does the first amount need to be negative?
No. NPV can evaluate any signed annual stream; the first amount simply occurs now.
Can I enter an extra cost in a later year?
Yes. Use a negative amount at that year’s position.
Does this handle irregular calendar dates?
No. It is an annual-period calculation rather than dated XNPV.