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NPV and IRR calculator, every step shown

Enter your cash flows and a discount rate. You get the net present value, the internal rate of return, payback and the multiple of money, plus each year's discount factor and present value so you can check the math by hand.

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Your cash flows, NPV and IRR

The example is an invented project: 1,000 out today, 1,600 back over five years, at a 10% discount rate. NPV is 222.64 and IRR is 18.59%.

Cash flows

Money out is negative. Year 0 is today; each later year is cash at the end of that year.

  1. Year 0
  2. Year 1
  3. Year 2
  4. Year 3
  5. Year 4
  6. Year 5
NPV
222.64
IRR
18.59%

NPV at 10%

222.64

IRR

18.59%

Above zero: at 10% the cash coming back is worth more today than what goes in, so the project earns more than 10% a year.

Payback
2.88 years
Discounted payback
3.67 years
Multiple of money
1.60x
Profitability index
1.22

Every step, year by year

YearCash1 ÷ (1 + r)tPresent valueRunning total
0(1,000.00)1.0000(1,000.00)(1,000.00)
1300.000.9091272.73(727.27)
2350.000.8264289.26(438.02)
3400.000.7513300.53(137.49)
4300.000.6830204.9067.41
5250.000.6209155.23222.64
NPV222.64

In Excel: =NPV(10%, year 1 to year 5) + year 0 gives 222.64. Putting year 0 inside NPV() discounts it one extra year and gives 202.40, the most common spreadsheet slip.

NPV at other discount rates

The IRR is where NPV crosses zero.

Rate0%5%10%15%20%25%30%
NPV60039122384(30)(126)(208)
How it works

Three inputs, every number shown

Same cash flow conventions as Excel and a finance textbook.

  1. 1

    Enter the cash flows

    Year 0 is today, so the upfront cost goes there as a negative number. Each later year is the cash at the end of that year. Add as many years as you need, up to 50, or paste a row or column from Excel.

  2. 2

    Set the discount rate

    Use the return you could get elsewhere at the same risk: a company's cost of capital, a fund's target return, or the rate a case interviewer gives you.

  3. 3

    Read NPV, IRR and the table

    NPV above zero means the project beats the rate. IRR is the rate where NPV is exactly zero. The table shows each year's discount factor and present value, so you can check every step by hand.

The method

How NPV and IRR are calculated, on the example

NPV = CF0 + CF1 ÷ (1 + r) + CF2 ÷ (1 + r)² + … + CFn ÷ (1 + r)ⁿ. IRR is the r that makes it zero.

  1. 1

    Discount each year

    Divide each year's cash by (1 + r) to the power of the year. At 10%, $300 in one year is worth $300 ÷ 1.10 = $272.73 today, and $250 in five years is worth $250 × 0.6209 = $155.23.

  2. 2

    Add them up for NPV

    NPV is the sum of every present value, with the upfront cost in year 0 counted as it is. For the example on this page: −1,000 + 272.73 + 289.26 + 300.53 + 204.90 + 155.23 = 222.64.

  3. 3

    Find the rate where NPV is zero

    That rate is the IRR. NPV is 222.64 at 10% and below zero at 20%, so the IRR is between them: 18.59% for this example. In general there is no formula for it; you try rates until NPV reaches zero, which is what this calculator and Excel's IRR() do.

Practice estimating IRR by hand, free and no sign-up

Keep going

Learn the method, then say it out loud

Work NPV by hand, practice IRR in a paper LBO, or answer finance questions to the AI interviewer.

FAQ's

Frequently Asked Questions

Everything you need to know about Soreno, answered in one place.

Divide each year's cash flow by (1 + r) raised to the number of years until it arrives, then add them up, with the upfront cost in year 0 as a negative number. NPV = CF0 + CF1 ÷ (1 + r) + CF2 ÷ (1 + r)² + … + CFn ÷ (1 + r)ⁿ. Above zero, the investment earns more than the discount rate r.
IRR is the discount rate that makes NPV exactly zero. In general there is no formula for it, so you try rates until NPV reaches zero. This calculator scans rates from −99% to 1,000% a year and narrows in on every point where NPV crosses zero. Microsoft says Excel's IRR() starts from a guess of 10% and gives up with #NUM! if it can't find an answer after 20 tries.
Excel's NPV() assumes the first value arrives one period from now. Microsoft's own help says that if your first cash flow is at the start of the first period, add it to the NPV result instead of putting it inside the function. So write =NPV(rate, year 1 to year n) + year 0. Putting year 0 inside NPV() discounts every flow one year too many: for the example on this page it gives 202.40 instead of 222.64.
NPV is a dollar amount at a rate you choose: how much value the project adds. IRR is a percentage: the rate at which the project breaks even. They agree on a single project with normal cash flows (IRR above the rate means NPV above zero), but they can rank two projects differently when the projects differ in size or timing. When they disagree, go by NPV.
When the cash flow changes sign more than once, for example money out, money in, then money out again for a cleanup cost. Cash flows of −100, +230 and −132 have an NPV of zero at both 10% and 20%. The calculator lists every IRR it finds and warns you; use NPV at your discount rate in that case.
The return you could earn elsewhere on something just as risky. For a company project that is usually its weighted average cost of capital (WACC); for a private equity deal it is the fund's target return; in a consulting case it is whatever rate the interviewer gives you. Riskier cash gets a higher rate.
Payback is how many years it takes for the cash coming back to cover what went in, without discounting. Discounted payback does the same with present values, so it is always longer. Multiple of money (MOIC) is total cash in divided by total cash out. Profitability index is the present value of the money coming in divided by the present value of the money going out; above 1 means NPV is above zero.
In banking and private equity you are asked to explain them ("walk me through how IRR works", "IRR vs MOIC") and to estimate an IRR from a multiple in your head. In a consulting case you usually get round numbers and decide whether an investment is worth making. This page is for checking your work. The NPV case math guide and the paper LBO practice are for doing it by hand.
No. The calculator runs in your browser. Your numbers are not stored or sent anywhere, and you do not need an account.

Sources

The calculator and the example are ours. The Excel behaviour is as Microsoft describes it.

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