NPV & IRR Calculator: Evaluate Project Profitability
The Two Metrics That Drive Investment Decisions
Net Present Value (NPV) and Internal Rate of Return (IRR) answer the same question differently: "Is this investment worth it?" NPV gives you a rupee amount; IRR gives you a percentage. Use both together for the best decision.
NPV: Is This Worth More Than It Costs?
NPV = Σ [Cash Flowₜ / (1 + r)ᵗ] – Initial Investment
- NPV > 0: Investment creates value → Accept
- NPV = 0: Investment breaks even
- NPV < 0: Investment destroys value → Reject
IRR: What Return Does This Investment Earn?
IRR is the discount rate at which NPV = 0. If IRR > your cost of capital (hurdle rate), the investment beats your minimum required return.
Worked Example
| Year | Cash Flow |
|---|---|
| 0 (investment) | -₹10,00,000 |
| 1 | +₹3,00,000 |
| 2 | +₹4,00,000 |
| 3 | +₹5,00,000 |
At 10% discount rate: NPV = ₹69,421 (positive → good investment). IRR = 14.5% (beats the 10% hurdle).
Evaluate your projects with the NPV & IRR calculator.