Finance & Economics / Business & Investment
NPV-IRR Calculator
Cash Flows (by period)
Year 1
Formulas
• NPV = -Initial + Σ(CFₜ / (1+r)ᵗ)
• IRR: Discount rate where NPV = 0
Evaluate discounted cash-flow projects by estimating net present value and internal rate of return for capital allocation decisions.
Formula
NPV = Σ[Cash Flow_t / (1 + r)^t] - Initial Investment; IRR is the discount rate where NPV = 0.
Worked Example
initialInvestment100000
annualCashFlows30000, 32000, 34000, 36000
discountRatePercent9
Result: Positive NPV and IRR above hurdle rateWhen discounted inflows exceed the initial outlay and IRR beats your target return, the project is financially attractive.
Frequently Asked Questions
Why can NPV and IRR conflict across projects?
Different project scale and timing can produce ranking conflicts; NPV is generally preferred for value maximization.
What discount rate should I use?
Use your cost of capital or risk-adjusted required return to evaluate whether cash flows compensate for risk.