Net Present Value discounts forecast cash inflows and outflows to their present value. It helps compare investments over time and determine whether anticipated financial benefits exceed the required cost of capital.
How to use this tool
Set period and discount rate
Define the appraisal period and discount rate.
Forecast cash flows by period
Forecast cash inflows and outflows by period.
Discount and total cash flows
Discount each cash flow and total the present values.
Compare NPV and test sensitivity
Compare NPV across options and test sensitivity to major assumptions.
References & further reading
Brealey, R. A., Myers, S. C. and Allen, F. (2020). Principles of Corporate Finance, 13th ed. McGraw-Hill.