l Net Present Value (NPV) - Internal Rate of Return (IRR) - Profitabilit

Enter cash flow at time (t)

  

Enter Discount Rate % (i)

  
      
Calculate the Net Present Value using:
Cash Flows you entered
Internal Rate of Return (IRR) of 5%

NPV formula:

PI  =  NPV without Initial Investment
  Initial Investment

NPV = ΣPVt
where PVt is denoted as
PVt  =  Ct
  (1 + i)t

where Ct = cash flow at time t
and i is the discount rate

Calculate the discount factor

(1 + i) = (1 + 0.05)
(1 + i) = 1.05

Now calculate each PV

Discount back to time 0

TimeCt)(1 + i)tPVt = Ct/(1 + i)t
0-5,000.001.00000-5,000.00
11,000.001.05000952.38
22,000.001.102501,814.06
33,000.001.157632,591.50

Determine NPV

NPV = ΣPVt
NPV = -5,000.00 + 952.38 + 1,814.06 + 2,591.50
NPV = 357.94

Since NPV is more than 0
We should pursue the project.