Net Present Value (NPV) or Net Present Worth (NPW) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is useful in capital budgeting for analysing the profitability of a project investment. It also aids in assessing return of interest. Project or investment with a higher NPV, is profitable while negative NPV results in loss. Use this Online net present value calculator to calculate the NPV of cash inflows and cash outflows.
Net Present Value (NPV) or Net Present Worth (NPW) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is useful in capital budgeting for analysing the profitability of a project investment. It also aids in assessing return of interest. Project or investment with a higher NPV, is profitable while negative NPV results in loss. Use this Online net present value calculator to calculate the NPV of cash inflows and cash outflows.
Let us consider that 1000 $ is initially invested at a rate of 4 % for 2 years. Cash Flow for first year is 1000 and second year is 2000. What will be its net present value?
Present value for year 1:
C1/(1+r)1 = 1000 / (1 + 0.04)^1 = 961.54 $
Present value for year 2:
C2/(1+r)2 = 2000 / (1+0.04)^2 = 1849.11$
NPV = -1000 + (961.54 + 1849.11) = 1810.65$
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