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IRR & NPV Calculator

Is this investment worth it? Enter the initial investment, the cash flows you expect each year and a discount rate, and the calculator shows the NPV (net present value), the IRR (internal rate of return), the payback period and the ROI. These are the four numbers that tell you whether a project creates or destroys value.

Cash flows per year

Enter the initial investment, the discount rate you require (your cost of capital) and the net cash flow you expect each year. Use negative values for a year with a cash outflow.

NPV (net present value)
€2,988.43
IRR (internal rate of return)
15.24%

How the result is reached

Sum of cash flows€15,000.00
Net profit (cash flows minus investment)€5,000.00
Total ROI50%
Payback (recovery period)3.33 years
DecisionCreates value (positive NPV)

Educational estimate, not financial advice. It assumes net, nominal yearly cash flows; it does not include taxes on profit, inflation or a residual value.

NPV: net present value

NPV brings every future cash flow back to today's value, at the discount rate you choose, and subtracts the initial investment: NPV = minus the investment, plus the sum of each cash flow divided by (1 + rate) to the power of the year. A euro received in five years is worth less than a euro today, and the discount rate measures that difference. If the NPV is positive the project creates value (it earns more than the required rate); if it is negative, it destroys value.

IRR: internal rate of return

The IRR is the discount rate that makes the NPV exactly zero: the project's implied annual return. The decision rule is simple, it is worth it when the IRR is above the discount rate (your cost of capital or required return). The calculator solves it numerically, finding the rate that zeroes the NPV.

Payback: how long to recover

The payback period is the number of years until the cumulative cash flows equal the investment. With 10,000 € invested and 3,000 € a year, it is recovered after 3 years and a third (3.3 years). It is the most intuitive number, but it ignores the time value of money and what happens afterwards, which is why it is used alongside NPV and IRR, not on its own.

ROI: total return

ROI (return on investment) is the total profit divided by the investment: ROI = (sum of cash flows minus the investment) divided by the investment. It measures how much you gained in total over the whole horizon, without spreading it across years. It is useful to compare the size of the gain, but it does not tell a 2-year return from a 10-year one; that is what the IRR (annual) and payback are for.

The discount rate is yours

The discount rate is what you enter as your cost of capital or minimum required return, it is not a legal value. Use the return of a safe alternative (a deposit or savings certificates) or the cost of your financing. The higher the rate, the more demanding the calculation and the lower the NPV.

Worked example

A 10,000 € investment that returns 3,000 € a year for 5 years, with a 5% discount rate. The cash flows sum to 15,000 €, so the total ROI is (15,000 minus 10,000) divided by 10,000 = 50%. Bringing each year's 3,000 € back to today at 5%, the NPV is 2,988 € (positive, the project creates value). The IRR, the rate that would zero the NPV, is about 15.2%, well above the 5% required, so the investment pays off. The simple payback is 3.3 years (the 10,000 € is recovered after three years and a third).

Frequently asked questions

What is NPV (net present value)?
It is the sum of all future cash flows brought back to today's value (at the discount rate), minus the initial investment. A positive NPV means the project earns more than the required rate and creates value; a negative NPV means it destroys value.
What is IRR (internal rate of return)?
It is the discount rate that makes the NPV equal to zero, the project's implied annual return. An investment is worth it when the IRR is above the discount rate (your cost of capital or required return).
What is the difference between IRR and NPV?
NPV gives the gain in today's euros at a rate you choose; IRR gives the return as a percentage, without choosing a rate. They are complementary: NPV says how much, IRR says at what rate. When the IRR is higher than the discount rate, the NPV is positive.
What is payback?
It is the time it takes to recover the investment from the cumulative cash flows. It is the most intuitive number, but it ignores the time value of money and the cash flows after recovery, so it should be read alongside NPV and IRR.
Which discount rate should I use?
The discount rate is your cost of capital or the minimum return you require. You can use the return of a safe alternative (a term deposit, savings certificates) or the cost of your financing. It is a value you choose, not one fixed in any table.
Does the calculator account for taxes and inflation?
No. Enter net, nominal cash flows; the calculator does not deduct income or corporate tax on the profit, nor adjust for inflation. To compare in real terms, use inflation-adjusted cash flows and a real discount rate too.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: 2026-06-25