How to Calculate NPV & IRR
Calculate Net Present Value and Internal Rate of Return for investment project evaluation.
The Formula
NPV = Sigma(Ct/(1+r)^t)The npv & irr formula uses the mathematical relationship: NPV = Sigma(Ct/(1+r)^t). Each variable in the formula represents a measurable quantity that affects the final result.
Step-by-Step Method
- 1Identify all input values needed for the npv & irr calculation.
- 2Substitute your known values into the formula: NPV = Sigma(Ct/(1+r)^t).
- 3Perform the arithmetic operations in the correct order (PEMDAS/BODMAS).
- 4Check that your result has the correct units and is within a reasonable range.
- 5Verify using the interactive NPV & IRR Calculator to confirm your answer.
Related Topics
NPVIRRnet present valueinternal rate of return
Use the Interactive Calculator
Skip the manual math — get instant results with our free NPV & IRR calculator.