Investments
NPV Calculator
Net Present Value — discounts future cash flows back to today's rupees, sums them, and subtracts the initial investment. Positive = project creates value. The fundamental tool for capital budgeting.
Inputs
Cumulative discounted value
Year 0 = initial outflow; positive when project breaks even
FAQs
What is Net Present Value (NPV)?
NPV is the difference between the present value of cash inflows and the present value of cash outflows. Positive NPV means the project creates value at the chosen discount rate; negative NPV means it destroys value.
How is the discount rate chosen?
Use your cost of capital — for businesses, weighted average cost of capital (WACC) or cost of debt. For personal investments, use the return you'd otherwise earn (e.g., 12% for equity opportunity cost).
What is profitability index?
(NPV + Initial Investment) ÷ Initial Investment. Tells you the present value generated per rupee invested. >1 means accept; <1 means reject.
NPV vs IRR — which is better?
NPV gives an absolute rupee answer (creates ₹X of value). IRR gives a percentage. Use NPV for ranking mutually exclusive projects of different sizes; use IRR to compare against hurdle rates.