Finance / Investment
NPV and IRR Calculator (with Payback Period)
Judge an investment from its cash flows: the net present value at your discount rate, the internal rate of return, and the payback period, with a period-by-period table.
NPV and IRR Calculator (with Payback Period): Each cash flow is discounted to today by (1 + r)^t and the results are added: that is the net present value. The internal rate of return is the discount rate at which NPV is exactly zero, found by repeated halving. Payback is when the running total of cash flows turns positive, interpolated within the period. For −10,000 now and 3,000, 4,000, 4,000, and 3,000 over four years at 8%, NPV is about 1,588 and IRR about 14.9%. Runs 100% locally in your browser with zero server file uploads.
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| Period | Cash flow | Present value | Running total |
|---|---|---|---|
| 0 | -10,000 | -10,000 | -10,000 |
| 1 | 3,000 | 2,777.78 | -7,000 |
| 2 | 4,000 | 3,429.36 | -3,000 |
| 3 | 4,000 | 3,175.33 | 1,000 |
| 4 | 3,000 | 2,205.09 | 4,000 |
NPV discounts each cash flow back to today, CF ÷ (1 + r)^t, and adds them up, with the first flow at t = 0 and not discounted. A positive NPV means the project earns more than the discount rate. IRR is the rate at which NPV is exactly zero; with cash flows that change sign more than once, there can be more than one, and this shows the one found between −99.99% and 10,000%. Payback ignores the time value of money.
A worked example
Buying a machine for 10,000 that saves 3,000, 4,000, 4,000, and 3,000 over four years: discounted at 8%, the savings are worth about 11,588 today, so NPV ≈ 1,588 and the IRR is about 14.9%. The machine pays for itself after 2.75 years.
For a single return figure without timing, see the ROI calculator.
Choosing the discount rate
Use the return you would expect from other investments of similar risk, or your cost of borrowing. A higher rate shrinks distant cash flows more, which favours projects that pay back quickly.
For the tax effect of the asset, the depreciation calculator gives the yearly write-down.
How to use it
- Type the cash flows in order, the first one now, usually negative.
- Enter your discount rate per period.
- Read the NPV, IRR, and payback period, and check the table.
Privacy & limitations
Everything is calculated in your browser.
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Frequently asked questions
How do I decide with NPV and IRR?
Take projects whose NPV is above zero at your required return, or whose IRR is above it; when choosing between projects, prefer the higher NPV, which measures the size of the gain.
Why is there no IRR?
IRR needs both money going out and coming in; if every flow has the same sign, there is none.
Can there be more than one IRR?
Yes, when the cash flows change sign more than once, such as a project with a large clean-up cost at the end; NPV is then the safer guide.
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