NPV / IRR Calculator
Future cash flows (€)
VAN (NPV)
16.987 €
Profitable investment
TIR (IRR)
17.09%
Payback Period
2.9 years
Discounted cash flows
| Year | Cash flow | Discount factor | Discounted flow |
|---|---|---|---|
| 0 | -100.000 € | 1.0000 | -100.000 € |
| 1 | 30.000 € | 0.9091 | 27.273 € |
| 2 | 35.000 € | 0.8264 | 28.926 € |
| 3 | 40.000 € | 0.7513 | 30.053 € |
| 4 | 45.000 € | 0.6830 | 30.736 € |
| Total NPV | 16.987 € | ||
Frequently Asked Questions
NPV, IRR and investment analysis
What is NPV (Net Present Value)?
NPV calculates the present value of all future cash flows of an investment, discounted at the required rate of return, minus the initial investment. NPV > 0 means the project creates value; NPV < 0 means it destroys value.
What is IRR (Internal Rate of Return)?
IRR is the discount rate that makes NPV equal to zero. If the IRR is greater than the cost of capital (discount rate), the investment is worthwhile. IRR is calculated using an iterative method (bisection) as it has no direct formula.
What is the Payback Period?
The payback period is the time required to recover the initial investment through cash flows. It does not consider the time value of money (unlike the Discounted Payback Period), but is an intuitive measure of risk: fewer years means less risk.
What does net present value tell me?
It says what an investment is worth today, discounting the future flows at the rate you chose and subtracting the initial outlay. While it stays positive the investment earns more than that rate.
What is the difference between NPV and IRR?
The NPV is an amount of money and depends on the discount rate you pick. The IRR is the percentage that would bring the NPV to zero, so it reads as the implied return of the project.