The method
How it is worked out
NPV = Σ cash flow ÷ (1 + r)^t − cost; IRR is the r where NPV = 0
- hurdle rate
- The return you require, often your cost of capital plus a risk margin
NPV and IRR Calculator
Decide whether a project earns its keep: net present value and internal rate of return from an upfront cost and yearly cash flows. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Terminal valueNothing after year 5 is counted.
- TimingCash is assumed at year end; mid-year flows are worth slightly more.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the NPV and IRR Calculator
Judge a project or investment by net present value and internal rate of return from an upfront cost and five years of cash flows.
How it works and an example to tryShow less
How to use the result
Each cash flow is discounted at your hurdle rate and summed, less the cost. IRR is the rate that makes that sum zero. Payback is when cumulative cash turns positive.
Example to try
£100,000 up front returning £20k, £30k, £40k, £40k and £30k has an NPV of about £19,000 at a 10% hurdle and an IRR of 17%. Payback comes in year three.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Managers approving projects, founders comparing investments, students learning capital budgeting.
Mistakes worth avoiding
- Choosing by IRR alone when projects differ in size.
- Using a hurdle rate that ignores the risk of the project.
- Counting sunk costs already spent.
Questions
What does the NPV and IRR Calculator do?
Decide whether a project earns its keep: net present value and internal rate of return from an upfront cost and yearly cash flows.
How should I use the result?
Each cash flow is discounted at your hurdle rate and summed, less the cost. IRR is the rate that makes that sum zero. Payback is when cumulative cash turns positive.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with a npv and irr calculator?
Choosing by IRR alone when projects differ in size. Using a hurdle rate that ignores the risk of the project. Counting sunk costs already spent.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Results are estimates based on the figures entered, for general information only, and not financial, investment, tax or legal advice. See our terms of use.