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NPV & IRR Calculator
Test an investment with net present value, internal rate of return, payback period and a discount-rate sensitivity table.
Investment
AED
%
Your cost of capital or required return.
Expected cash flows
AED
AED
AED
AED
AED
Results
- Net present value (NPV)
- AED 197,649
- Positive: the project beats your required return
- Internal rate of return (IRR)
- 17.1%
- Payback period
- 3.3 years
- Discounted payback
- 4 years
- Profitability index
- 1.2
How NPV changes with the discount rate
| Discount rate | NPV |
|---|---|
| 6% | AED 337,730 |
| 8% | AED 264,711 |
| 10% | AED 197,649 |
| 12% | AED 135,931 |
| 14% | AED 79,021 |
Cash flows are assumed to arrive at the end of each year. IRR is not defined when cash flows never change sign.
Results are estimates for general information. They are not tax, legal or financial advice. Rules and rates change, so please check with an advisor before you act on them.
How it works
Net present value (NPV) discounts each future cash flow back to today at your required rate of return and subtracts the investment. A positive NPV means the project earns more than that rate.
The internal rate of return (IRR) is the discount rate at which NPV is exactly zero. The payback period shows how long it takes to earn back the investment, before and after discounting.
Questions
What discount rate should I use?
Usually your cost of capital: the return your lenders and shareholders expect, adjusted for the project's risk. Try a range; the sensitivity table shows how NPV changes.
Why is there no IRR?
IRR only exists when the cash flows change sign, for example an outflow followed by inflows. If every cash flow is positive or every one is negative, there is no rate that makes NPV zero.
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