NPV & IRR Calculator
Every capital-budgeting measure of a project at once — and of two, side by side.
Enter project B’s cash flows in the second column to compare the two projects.
Project A and project B
NPV at other discount rates
Where the NPV is zero the rate is an IRR. Your discount rate and every IRR are highlighted.
Cash flows, present values and running totals
How this was calculated
The same in Excel or Google Sheets
With the cash flows in column B, period 0 in B1:
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the NPV & IRR Calculator
Deciding whether a project, a machine or an investment is worth its cost usually takes several numbers, and each answers a different question. The net present value (NPV) is the value it adds today at your discount rate. The internal rate of return (IRR) is the rate it earns. The modified IRR (MIRR) fixes the IRR’s reinvestment assumption, the profitability index gives the value per rupee invested, and payback and discounted payback say how long the money is at risk.
Enter the cash flows once, a year, half-year, quarter or month apart, and this calculator shows all of them together, with a table and chart of the NPV at other discount rates. It warns when the cash flows have more than one IRR, or none, and when they are a loan rather than an investment. Tick Compare with a second project to put two projects side by side: the NPVs, the crossover rate at which their ranking flips and the equivalent annuity for projects of different lengths. Nothing you enter leaves your browser.
How to use it
- Choose how long one period is (a year, half-year, quarter or month) and the currency.
- Enter one cash flow per period, period 0 (today) first: money going out negative (the ± button flips the sign on a phone), money coming in positive. Or open Paste from a spreadsheet and paste a column or a row of numbers; a column of period numbers or years beside them is left out.
- Enter the discount rate — your cost of capital. For MIRR, enter the finance rate (what the money paid out costs) and the reinvestment rate (what the money received can earn); leave them empty to use the discount rate.
- To compare two projects, tick Compare with a second project and fill in the second column (or paste two columns).
- Read the NPV and the other measures, check any warning, and look at the NPV table and chart to see where the IRRs are. Copy the summary or download everything as CSV.
Examples
−1,20,000 today; 39,000, 30,000, 21,000, 37,000 and 46,000 at the end of years 1–5; discount rate 10%, finance rate 10%, reinvestment rate 12%
NPV ₹9,859.42 · IRR 13.07% · MIRR 12.61% · PI 1.082 · payback 3.81 years · discounted payback 4.65 years
Excel’s =MIRR(A2:A7, 10%, 12%) shows 13% with no decimals and 12.61% with two.
Project A as above; project B: −1,20,000; 70,000; 50,000; 20,000; 5,000; 5,000; at 10%
A: NPV ₹9,859.42, IRR 13.07% · B: NPV ₹6,504.65, IRR 13.41% · crossover rate 12.56%
B has the higher IRR because its cash comes back sooner, but at any discount rate below 12.56% A adds more value. Tick “Compare with a second project” to see this example.
−1,000; +2,300; −1,320
IRR 10% and 20% · NPV at 15% = +1.89
The cash flows change sign twice. The NPV is positive only between 10% and 20%, so neither IRR is a return you can compare with a hurdle rate.
−10,000 today, then 900 at the end of each of the next 12 months; 12% a year
NPV 162.36 at 0.9489% a month · IRR 1.2% a month (15.45% a year)
12% a year compounds to (1.12)^(1/12) − 1 = 0.9489% a month.
Common uses
- Decide whether a machine, a new outlet, a solar installation or a software project pays at your cost of capital.
- Choose between two projects — or two quotes for the same job — that you cannot both take.
- Check an investment memo or a spreadsheet: NPV, IRR, MIRR and payback from the same cash flows.
- Study capital budgeting with every intermediate figure shown: discount factors, present values and running totals.
The formulas
- NPV = CF₀ + CF₁ ÷ (1 + r) + CF₂ ÷ (1 + r)² + … + CFₙ ÷ (1 + r)ⁿ, with CFₜ the net cash flow of period t and r the discount rate per period. Period 0 is today and is not discounted.
- IRR: the rate r at which the NPV is zero. There is no formula for it; the calculator scans every rate from −99.99% to 10,000% a period for a change of sign in the NPV, narrows each one down, and also runs Newton–Raphson from a 10% guess, as Excel’s IRR does.
- MIRR = (FV of the positive cash flows at the reinvestment rate, at the last period ÷ PV of the negative cash flows at the finance rate)^(1 ÷ n) − 1, as Excel’s
MIRRdefines it. - Profitability index = PV of the cash flows after period 0 ÷ the period-0 investment = 1 + NPV ÷ investment.
- Payback is when the running total of the cash flows turns non-negative; discounted payback uses their present values. Within that period the cash is assumed to arrive evenly.
- Equivalent annuity = NPV × r ÷ (1 − (1 + r)⁻ⁿ): the level amount per period, over the project’s life, that has the same NPV.
Microsoft’s help pages for NPV, IRR and MIRR describe the spreadsheet functions; the page shows the matching formulas for your cash flows.
When the IRR misleads
Brealey, Myers & Allen’s Principles of Corporate Finance recommends NPV as the decision rule and lists the IRR’s pitfalls, each of which this calculator flags:
- Lending or borrowing? When money comes in first and goes out later, the IRR is the cost of the money: a lower IRR is better. The calculator calls this a loan pattern.
- Multiple rates of return. Cash flows that change sign more than once can have several IRRs, or none. All the rates found are listed, and the NPV table shows where the NPV is positive.
- Mutually exclusive projects. A smaller or quicker project can have the higher IRR and the lower NPV. With two projects, the calculator shows both and the crossover rate.
- More than one cost of capital. One discount rate is used for every period here; when the right rate changes over time, there is no single hurdle rate to compare an IRR with.
Comparing two projects: crossover rate and equivalent annuity
The crossover rate is the discount rate at which the two NPVs are equal. It is the IRR of the difference between the projects’ cash flows (B − A), sometimes called the incremental IRR. Below it one project has the higher NPV, above it the other; if your discount rate is below the crossover rate, the project with the later, larger cash flows usually wins even when its IRR is lower.
Projects that last different lengths of time are not comparable by NPV alone if each could be repeated when it ends: a three-year machine replaced twice competes with a nine-year one. The equivalent annuity turns each NPV into a level amount per period over its own life, so the one with the higher equivalent annuity is worth more per year of use.
Profitability index and payback
- A profitability index above 1 is the same as a positive NPV. It ranks projects by value per rupee invested, which helps when money is limited; between two projects you cannot both undertake, the higher NPV still adds more value. Brealey, Myers & Allen define the index as NPV ÷ investment, which is this ratio minus 1 and ranks projects the same way.
- Payback ignores everything after the payback point and, in its simple form, the time value of money. Discounted payback fixes the second problem, not the first. Use them as measures of how long money is at risk, alongside NPV.
Limitations
- Each cash flow is treated as arriving at the end of its period, with period 0 today. For cash flows on irregular dates use the XIRR calculator or the dated mode of the NPV calculator.
- One discount rate applies to every period. Taxes, inflation and financing costs count only if they are in the cash flows; use a nominal rate with cash flows that include inflation.
- IRRs are searched for between −99.99% and 10,000% a period. A rate at which the NPV only touches zero without crossing it can be missed.
- Up to 601 cash flows (periods 0 to 600) and two projects at a time.
Privacy
Everything is calculated in your browser. The cash flows, rates and results are never uploaded or stored on a server.
Frequently asked questions
What is the difference between NPV and IRR?
NPV is the value a project adds, in money, at your discount rate. IRR is the discount rate at which that value would be zero. For a project with money going out first and coming in later, both give the same accept-or-reject answer: a positive NPV means an IRR above the discount rate. They can disagree when you choose between projects of different size or timing, and then NPV is the better guide.
Why does my project have two IRRs?
Because its cash flows change sign more than once — for example a mine that costs money to open, earns for years and then costs money to close. The NPV can then be zero at two (or more) rates. Neither is a meaningful “return”; look at the NPV at your discount rate, or at the MIRR, which has only one value.
What is MIRR and when should I use it?
The modified internal rate of return assumes that the money a project pays out can be reinvested at a rate you choose (often the cost of capital) and that its costs are financed at another, instead of the IRR’s assumption that everything earns the IRR itself. It always has one value, and for projects with high IRRs it is usually the more realistic figure.
Which project should I choose when NPV and IRR disagree?
If you can take only one, the one with the higher NPV at your discount rate: it adds more value. The IRR ranks projects by percentage return regardless of how much money they put to work or for how long. The crossover rate shows how far your discount rate would have to move before the ranking flips.
What is a good payback period?
There is no universal answer: it depends on how risky the project is and how soon you need the money back. Payback says nothing about cash after the payback point, so two projects with the same payback can have very different NPVs. For a project that pays out first and only receives money afterwards, discounted payback is never shorter than simple payback at a positive discount rate, and it may never be reached at all.
Why is Excel’s NPV different from this one?
Excel’s NPV treats its first value as arriving one period from now. For an investment made today, write =NPV(rate, year 1 … year n) + today’s amount; the page shows that formula for your cash flows. Excel also skips empty cells, which moves later cash flows a period earlier — this calculator counts an empty row between two amounts as 0.