NPV & IRR Calculator (Cash-Flow Table + CSV)

Understanding NPV & IRR

NPV discounts each cash flow back to today and sums the results. Positive NPV means value created at your chosen discount rate.

IRR is the discount rate that makes NPV = 0. If cash-flow signs switch multiple times, multiple IRRs can exist; rely on NPV or MIRR in that case.

• Periods mode assumes evenly spaced flows and converts the annual rate to a per-period rate.
• Dates mode uses exact day counts from t₀ (XNPV/XIRR).
• Your data never leaves the page.

What Are NPV and IRR? (Plain-English Guide)

Net Present Value (NPV) and Internal Rate of Return (IRR) are two essential ways to judge whether an investment or project is worth doing. Both start from the same place—a list of cash flows over time (money out as negatives, money in as positives)—and both “time-weight” money to reflect the idea that £/$1 today is worth more than £/$1 later.

NPV: Value Created at Your Required Return

NPV discounts each cash flow back to today using a discount rate (often your required return or cost of capital) and then sums them up. If the result is positive, the project creates value above your required return; if it’s negative, it falls short. In short: choose projects with the highest positive NPV when capital is limited.

IRR: The Break-Even Return

IRR is the annualised rate at which NPV equals zero. Think of it as the “average annual return” implied by your cash flows. A rule of thumb: if IRR exceeds your required return, the project clears the hurdle. If it’s lower, it doesn’t. IRR is intuitive for quick comparisons, while NPV is more reliable when projects differ in size or timing.

Dates vs. Periods (When to Use Each)

• Equal periods (Year/Quarter/Month): Use when cash flows arrive on a regular schedule—e.g., monthly subscriptions or annual maintenance costs.
• Exact dates (XNPV/XIRR): Use when timing is irregular—e.g., milestone payments or uneven project phases. Date-based math discounts by the exact number of days between cash flows.

Picking a Discount Rate

Common choices include your cost of capital, a target return, or a risk-adjusted rate for the project’s profile. Higher rates penalise distant cash flows more, lowering NPV. Not sure where to start? Many users try a base case (e.g., 8–12% annually) and run quick sensitivities.

Quick Example

Suppose you invest -1,000 today and expect +300, +400, and +500 over three periods. At a 10% annual discount rate, NPV is roughly -21 (slightly negative). The IRR comes out near ~9.7%. Since 9.7% is below 10%, the project just misses your hurdle.

Common Pitfalls to Avoid

• Multiple IRRs: If your cash-flow signs change more than once (e.g., negative → positive → negative), there can be several IRRs or none. In these cases, rely on NPV (or consider MIRR).
• Comparing different sizes: IRR can favour smaller, fast-payback projects. Use NPV to compare projects with different scales.
• Ignoring timing: For irregular dates, use XNPV/XIRR so day counts are accurate.
• Using the wrong rate: Match the rate to risk. A too-low rate can overstate value.

Pro Tips

• Run a sensitivity check: try ±2–3% around your discount rate to see how robust the NPV is.
• When in doubt, prioritise NPV for decisions; use IRR as a supporting “speedometer.”