How this calculation works
Compare a project’s upfront cost with the present value of its later annual net cash flows. A positive NPV means those entered flows exceed the initial cost after discounting at your required rate; it is not a statement that the cash flows are certain. Use net cash flows for each year, including later costs as negative amounts.
Worked example
This example uses illustrative inputs. Your current result is shown above.
Enter ₹1,500 initial investment, 10% discount rate and annual cash flows 1100 then 1210. Their present values are ₹1,000 each, so future-flow PV is ₹2,000 and NPV is ₹500. The profitability index is 1.3333 and undiscounted receipts total ₹2,310.
Assumptions and limits
- The initial investment occurs now; the first listed cash flow occurs at the end of year 1.
- Cash flows and the discount rate use a consistent currency and inflation basis.
- The discount rate stays fixed, and cash-flow risk, financing details and any omitted terminal value are not generated automatically.
Questions people ask
Should I repeat the initial investment as the first cash-flow line?
No. The initial-investment field already deducts it at time zero. The first line is the end-of-year-1 net flow; repeating the upfront cost would count it twice.
Can a later year contain a negative amount?
Yes. A repair, replacement or other net outflow can be entered as a negative annual flow. The discounted-flows result is then a net sum rather than gross receipts alone.
Does positive NPV mean guaranteed profit?
No. It is favourable only relative to the entered cash flows and discount rate. Neither the probability of receiving those flows nor unentered project costs is assessed.