.npv-calculator-wrapper {
max-width: 650px;
margin: 0 auto;
background-color: #ffffff;
border: 1px solid #e0e0e0;
border-radius: 8px;
padding: 25px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
}
.npv-header {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.npv-input-group {
margin-bottom: 20px;
}
.npv-input-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #34495e;
}
.npv-input-group input {
width: 100%;
padding: 12px;
border: 1px solid #bdc3c7;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
transition: border-color 0.3s;
}
.npv-input-group input:focus {
border-color: #3498db;
outline: none;
}
.npv-help-text {
display: block;
font-size: 12px;
color: #7f8c8d;
margin-top: 4px;
}
.npv-btn {
width: 100%;
padding: 14px;
background-color: #2980b9;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: bold;
cursor: pointer;
transition: background-color 0.2s;
}
.npv-btn:hover {
background-color: #2471a3;
}
.npv-results {
margin-top: 30px;
padding: 20px;
background-color: #f8f9fa;
border-radius: 6px;
display: none;
border-left: 5px solid #2980b9;
}
.npv-result-row {
display: flex;
justify-content: space-between;
align-items: center;
margin-bottom: 10px;
padding-bottom: 10px;
border-bottom: 1px solid #eee;
}
.npv-result-row:last-child {
border-bottom: none;
margin-bottom: 0;
padding-bottom: 0;
}
.npv-label {
font-weight: 500;
color: #555;
}
.npv-value {
font-weight: 700;
font-size: 18px;
color: #2c3e50;
}
.npv-final-val {
font-size: 24px;
color: #27ae60;
}
.npv-verdict {
margin-top: 15px;
padding: 10px;
text-align: center;
border-radius: 4px;
font-weight: bold;
}
.verdict-good {
background-color: #d4edda;
color: #155724;
}
.verdict-bad {
background-color: #f8d7da;
color: #721c24;
}
function calculateNPV() {
var investmentInput = document.getElementById('initialInvestment').value;
var rateInput = document.getElementById('discountRate').value;
var flowsInput = document.getElementById('cashFlows').value;
var resultBox = document.getElementById('npvResultBox');
var verdictBox = document.getElementById('npvVerdict');
// Basic Validation
if (investmentInput === " || rateInput === " || flowsInput === ") {
alert('Please fill in all fields correctly.');
return;
}
var initialInvestment = parseFloat(investmentInput);
var discountRate = parseFloat(rateInput) / 100;
// Parse comma-separated flows
var flowsArray = flowsInput.split(',').map(function(item) {
return parseFloat(item.trim());
});
// Validate parsed numbers
if (isNaN(initialInvestment) || isNaN(discountRate)) {
alert('Please enter valid numbers for investment and discount rate.');
return;
}
var totalPV = 0;
var hasInvalidFlow = false;
// Calculate PV for each year
for (var t = 0; t 0) {
npvDisplay.style.color = '#27ae60'; // Green
verdictBox.innerHTML = 'Positive NPV: The investment is expected to generate value.';
verdictBox.className = 'npv-verdict verdict-good';
} else if (npv < 0) {
npvDisplay.style.color = '#c0392b'; // Red
verdictBox.innerHTML = 'Negative NPV: The investment may result in a loss of value.';
verdictBox.className = 'npv-verdict verdict-bad';
} else {
npvDisplay.style.color = '#7f8c8d'; // Grey
verdictBox.innerHTML = 'Break-even: The investment is expected to neither gain nor lose value.';
verdictBox.className = 'npv-verdict';
verdictBox.style.backgroundColor = '#e2e6ea';
verdictBox.style.color = '#333';
}
resultBox.style.display = 'block';
}
NPV Calculator with Discount Rate
Enter the initial cost as a positive number.
The required rate of return or cost of capital.
Enter net cash flows for each year separated by commas (Year 1, Year 2, etc.).
Total Present Value of Future Flows:
$0.00
Initial Investment:
$0.00
Net Present Value (NPV):
$0.00
Understanding Net Present Value (NPV) and Discount Rates
Net Present Value (NPV) is one of the most reliable methods used in capital budgeting and investment planning to determine the profitability of a proposed investment or project. Unlike simpler metrics that look only at total profit, NPV accounts for the time value of money (TVM).
This calculator helps you assess whether an investment is worthwhile by translating future cash flows into today's dollars using a specific discount rate. If the resulting NPV is positive, the project is theoretically profitable. If it is negative, the project may result in a net loss relative to other investment opportunities.
What is the Discount Rate?
The "Discount Rate" is a critical input in this calculation. It represents the rate of return required by the investor or the cost of capital for a company. It reflects the opportunity cost of investing money in this specific project rather than elsewhere.
- Higher Discount Rate: Implies higher risk or higher opportunity cost. This lowers the present value of future cash flows, making it harder to achieve a positive NPV.
- Lower Discount Rate: Implies lower risk. Future cash flows retain more of their value, making it easier to achieve a positive NPV.
The NPV Formula
The Net Present Value is calculated by summing the Present Values (PV) of all future cash flows and subtracting the initial investment.
NPV = Σ [ Cash Flow / (1 + r)^t ] – Initial Investment
Where:
- Cash Flow: The net cash inflow or outflow during a single period.
- r: The discount rate (expressed as a decimal).
- t: The time period (year) when the cash flow occurs.
Example Calculation
Imagine you are considering an investment with the following parameters:
- Initial Investment: $10,000
- Discount Rate: 10% (0.10)
- Year 1 Cash Flow: $3,000
- Year 2 Cash Flow: $4,000
- Year 3 Cash Flow: $5,000
The calculation would proceed as follows:
- Year 1 PV: $3,000 / (1.10)^1 = $2,727.27
- Year 2 PV: $4,000 / (1.10)^2 = $3,305.79
- Year 3 PV: $5,000 / (1.10)^3 = $3,756.57
- Total PV of Flows: $2,727.27 + $3,305.79 + $3,756.57 = $9,789.63
- NPV: $9,789.63 – $10,000 = -$210.37
In this example, the NPV is negative, suggesting that at a 10% required rate of return, this investment destroys value and should likely be rejected.
How to Use This Calculator
- Enter Initial Investment: Input the total upfront cost required to start the project. Do not enter a negative sign; the calculator handles this logic automatically.
- Set Discount Rate: Input your target annual rate of return or Weighted Average Cost of Capital (WACC).
- Input Cash Flows: Enter the expected net income for each future year, separated by commas. For example, if you expect to make $5,000 in Year 1 and $6,000 in Year 2, enter:
5000, 6000. - Analyze Result: Click "Calculate." A positive result (Green) indicates financial viability, while a negative result (Red) indicates the project falls short of your required return.