Net Present Value Calculator
What is Net Present Value (NPV)?
Net Present Value (NPV) is a financial calculation used when determining the time value of money to determine the “present day value” of a series of financial streams.
At its core, it is a combination of some different Present Value (PV) calculations that take place at different times.
As this calculator is structured to parallel the results of a financial calculator, inputs and outputs will be similar – for example, a negative present value (or payment) means an outflow as opposed to a directly negative number.
How is the Net Present Value calculated?
Net Present Value is a combination of different future values from different times, all which are put into one larger present value.
The calculator is using a present value calculation for each different future value to bring the total amount to one date.
What is Present Value?
Present Value (PV) is the total value at the beginning of the time period.
What is Future Value?
Future Value (FV) is the total value at the end of the time period.
What are periods?
Periods are the number of times that compounding (and payments) take place.
What is the rate?
The rate is the amount of interest earned per compounding period.
What is Payment (PMT)?
A payment is an amount either deposited or withdrawn at each compounding period.
A negative number designates an amount that is deposited, while a positive one withdrawn. For example, if $100 is deposited each compounding period, it would be entered as '-100', while if $75 was payed out each compounding period, it would be entered as '75'.
What are Payments at start or end of a period?
A payment at the beginning of a period would mean that the payment (or deposit) occurs at the beginning of each period.
A payment at the end of a period would mean that the payment (or deposit) occurs at the end of each period.
Sources and External Resources
More Time Value of Money Calculators