This professional-grade NPV calculator helps analysts, founders, and students evaluate investments by discounting future cash flows to today’s money. It supports both classic periodic cash flows and date-based XNPV and follows accessibility/performance best practices.

Data Source and Methodology

• Primary reference: Brealey, Myers, and Allen, Principles of Corporate Finance — DCF chapter. (Publisher page linked in your original.)
• Function parity: Microsoft’s NPV and XNPV definitions for spreadsheet consistency.

The Formula Explained

How to Use

1. Enter your discount rate (effective annual). Negative values above −100% are allowed.
2. Choose Periodic or Dated (XNPV). For periodic, set the frequency and timing.
3. Enter the initial cash flow at \(t=0\) (usually negative for an investment) and add the cash flows.
4. Review NPV, PV of inflows/outflows, Profitability Index, and the sensitivity table.

Worked Example

Inputs: \(C_0=-10{,}000\); inflows \(3{,}000, 4{,}000, 4{,}000, 3{,}000\) at the end of years 1–4; \(r=10\%\); \(f=1\).

1. \(r_p=(1+0.10)^{1/1}-1=0.10\).
2. PV1 \(=3000/(1.1)^1=2727.27\); PV2 \(=4000/(1.1)^2=3305.79\); PV3 \(=4000/(1.1)^3=3005.26\); PV4 \(=3000/(1.1)^4=2047.10\).
3. Sum PV(inflows) \(=11{,}085.42\).
4. NPV \(=-10{,}000+11{,}085.42=\$1{,}085.42\).

Since NPV > 0, the project adds value at a 10% required return.

Frequently Asked Questions (FAQ)

When should I use XNPV instead of NPV?

Use XNPV when cash flows occur on irregular dates. It discounts using the actual days between dates divided by 365.

How is the per-period rate determined in periodic mode?

From the effective annual rate \(r\) and frequency \(f\): \(r_p=(1+r)^{1/f}-1\).

What does the “Beginning of period” option do?

It shifts periodic cash flows back one period (annuity due), increasing their PV versus end-of-period timing.

Profitability Index (PI)

\(\mathrm{PI}=\frac{\text{PV(inflows)}}{|\text{Initial investment}|}\). Values above 1 suggest value creation.

Full original guide (expanded)

Your previous content is preserved here (lightly edited for consistency and accessibility) and reflected across the integrated sections above.

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\mathrm{NPV} = C_0 + \sum_{t=1}^{N} \frac{C_t}{(1+r_p)^{t-\delta}}, \quad \delta = \begin{cases} 0 & \text{(end)}\\ 1 & \text{(begin)} \end{cases}

r_p = (1+r)^{1/f} - 1

\mathrm{XNPV} = \sum_{i=0}^{N} \frac{C_i}{(1+r)^{\frac{d_i - d_0}{365}}}

Periodic NPV (equal spacing): \[ \mathrm{NPV} = C_0 + \sum_{t=1}^{N} \frac{C_t}{(1+r_p)^{t-\delta}}, \quad \delta = \begin{cases} 0 & \text{(end)}\\ 1 & \text{(begin)} \end{cases} \] Per-period rate from effective annual \(r\) and frequency \(f\): \[ r_p = (1+r)^{1/f} - 1 \] XNPV (irregular dates, Actual/365): \[ \mathrm{XNPV} = \sum_{i=0}^{N} \frac{C_i}{(1+r)^{\frac{d_i - d_0}{365}}} \]