NPV & IRR Calculator
Enter the upfront investment and the yearly cash flows it produces. Get NPV at your discount rate and the IRR — the project’s built-in return.
| Net present value (NPV) | — |
| Internal rate of return (IRR) | — |
| Undiscounted total cash in | — |
NPV: the project’s value in today’s dollars
NPV = −Cost + Σ CashFlowt ÷ (1 + r)t
Discount every future cash flow to today, subtract the investment. Positive NPV means the project beats your required return; the default example ($50,000 in, $68,000 spread over 4 years, 10% hurdle) shows a modest positive NPV — acceptable, not exciting.
IRR: the rate the project pays
IRR is the discount rate at which NPV = 0 — the project’s internal return, comparable directly with alternatives ("this machine yields 13.8% — the market yields ~10%"). Decision rule: accept when IRR exceeds your hurdle rate.
Where each metric misleads
- IRR ignores scale: a 40% IRR on $1,000 beats a 15% IRR on $500,000 by percentage and loses by $74,000 of value. NPV ranks big decisions correctly.
- Unusual cash flows break IRR: sign changes (invest, earn, reinvest) can create multiple or no IRRs — the calculator says so when it happens.
- Both are guesses about the future: the discipline is in honest cash-flow forecasts, not in the arithmetic.
Frequently asked questions
What does a positive NPV mean?
The project returns more than your required rate — it creates value. NPV of +$3,000 at a 10% hurdle means it beats a 10% alternative by $3,000 in today’s money.
What is a good IRR?
Anything above your cost of capital or best alternative. Businesses commonly demand 12–20% for risky projects; comparing against ~10% stock-market returns is a reasonable personal hurdle.
NPV or IRR — which decides?
When they disagree (different scales or timing), trust NPV — it measures dollars of value created. IRR is best as an intuitive communication number.
What discount rate should I use?
Your genuine alternative: borrowing cost if financed, expected portfolio return if it comes from investments, or a higher hurdle to price in project risk.
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Last updated: 2026-07-08