Overview
Enter a discount rate and any number of future annual cash flows (add or remove rows as needed) to calculate each cash flow's present value and the total present value (PV): PV = Σ CFₜ ÷ (1 + r)ᵗ, where CFₜ is the cash flow in year t and r is the discount rate. Optionally enter an initial investment to also see the net present value (NPV) - present value minus that upfront cost - the standard capital-budgeting metric for deciding whether a project or investment is expected to add value at a given required rate of return. Each year's individual discounted value is shown alongside the total, so it's clear how much of the present value comes from near-term versus distant cash flows. This models simple, known future cash flows discounted at a single flat rate - it doesn't forecast the cash flows themselves or handle a rate that changes over time. Useful for capital-budgeting decisions, valuing a simple investment, or finance coursework. Runs entirely client-side, and this is an informational estimate, not financial advice.
Best for: Evaluating whether a project's expected future cash flows justify its upfront cost at a given discount rate
How to use this tool
- Enter the discount rate. The required rate of return used to discount future cash flows back to today's dollars.
- Add each year's expected cash flow. Use the add/remove row buttons to list as many years of cash flow as needed.
- Read the present value (and NPV, if applicable). Each year's discounted value, the total present value, and - if an initial investment is entered - the net present value.
Frequently asked questions
Present value is simply the sum of all future cash flows discounted back to today. Net present value subtracts an upfront cost (like an initial investment) from that present value, answering whether the discounted future cash flows are worth more or less than what it costs to get them - a positive NPV generally suggests the investment adds value at the given discount rate.
Discounting reflects that money received later is worth less today than the same amount received sooner, both because of the time value of money and the risk that a distant cash flow might not materialize as expected. Each additional year of delay divides that cash flow by another factor of (1 + r), shrinking its contribution to the total.
No - you provide the expected cash flow for each year yourself. This tool only performs the discounting arithmetic once those estimates are in hand; forecasting the cash flows themselves depends on business-specific assumptions this calculator has no way to know.