.calculator-container {
font-family: Arial, sans-serif;
border: 1px solid #ccc;
padding: 20px;
border-radius: 8px;
max-width: 500px;
margin: 20px auto;
background-color: #f9f9f9;
}
.calculator-inputs {
display: grid;
gap: 15px;
}
.input-row {
display: flex;
flex-direction: column;
}
.input-row label {
margin-bottom: 5px;
font-weight: bold;
}
.input-row input {
padding: 8px;
border: 1px solid #ccc;
border-radius: 4px;
width: 100%;
box-sizing: border-box;
}
.calculator-inputs button {
padding: 10px 15px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
transition: background-color 0.3s ease;
}
.calculator-inputs button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
border: 1px solid #ddd;
background-color: #fff;
border-radius: 4px;
font-size: 18px;
text-align: center;
}
.calculator-result.positive {
color: #28a745;
border-left: 5px solid #28a745;
}
.calculator-result.negative {
color: #dc3545;
border-left: 5px solid #dc3545;
}
.calculator-result.zero {
color: #6c757d;
border-left: 5px solid #6c757d;
}
function calculateNPV() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var discountRate = parseFloat(document.getElementById("discountRate").value) / 100; // Convert percentage to decimal
var cashFlowsInput = document.getElementById("cashFlows").value;
var resultElement = document.getElementById("result");
resultElement.innerHTML = "";
resultElement.className = "calculator-result"; // Reset classes
if (isNaN(initialInvestment) || isNaN(discountRate) || cashFlowsInput.trim() === "") {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
var cashFlowsArray = cashFlowsInput.split(',').map(function(item) {
return parseFloat(item.trim());
});
var validCashFlows = cashFlowsArray.every(function(flow) {
return !isNaN(flow);
});
if (!validCashFlows) {
resultElement.innerHTML = "Please ensure all cash flows are valid numbers.";
return;
}
var npv = -initialInvestment; // Start with the initial investment as a negative cash flow
for (var i = 0; i 0) {
resultElement.innerHTML = resultMessage;
resultElement.classList.add("positive");
} else if (npv < 0) {
resultElement.innerHTML = resultMessage;
resultElement.classList.add("negative");
} else {
resultElement.innerHTML = resultMessage;
resultElement.classList.add("zero");
}
}
Understanding Net Present Value (NPV)
Net Present Value (NPV) is a fundamental financial metric used in capital budgeting and investment appraisal to determine the profitability of a projected investment or project. It calculates the difference between the present value of future cash inflows and the present value of cash outflows over a period of time. In simpler terms, it tells you how much an investment is worth today, considering the time value of money.
The core principle behind NPV is that money today is worth more than the same amount of money in the future due to its potential earning capacity. This is accounted for by using a discount rate, which represents the minimum acceptable rate of return (or the cost of capital) for an investment. A higher discount rate reflects a higher risk or opportunity cost.
How to Calculate NPV:
The formula for NPV is:
NPV = Σ [Cash Flowt / (1 + r)t] – Initial Investment
- Cash Flowt: The net cash flow during period t.
- r: The discount rate (or required rate of return).
- t: The time period (e.g., year 1, year 2, etc.).
- Initial Investment: The upfront cost of the investment.
Our calculator simplifies this by allowing you to enter the initial investment, the annual discount rate as a percentage, and a comma-separated list of expected cash flows for subsequent periods.
Interpreting the NPV Result:
- Positive NPV: If the NPV is positive, it suggests that the projected earnings generated by the investment are expected to exceed the anticipated costs, making the investment potentially profitable and advisable.
- Negative NPV: A negative NPV indicates that the expected costs of the investment are higher than its expected returns, meaning the project is likely to result in a net loss and should probably be rejected.
- Zero NPV: An NPV of zero suggests that the investment is expected to earn exactly the required rate of return. In this scenario, the decision to invest may depend on other strategic factors.
NPV analysis is a powerful tool for making informed investment decisions by quantifying the expected value of an opportunity in today's terms.