Investment Return Calculator (NPV, IRR)
Evaluate a project over five years with NPV, IRR and payback period.
Results
Net present value (NPV)
The sum of future cash flows discounted to their present value, minus the initial investment. A positive NPV means the project will earn more than the required return. —
Internal rate of return (IRR)
The project's own annual return — the rate at which NPV equals zero. If the IRR is higher than the discount rate, the project is attractive. —
Simple payback period
How many years it takes for cash flows to recover the initial investment, without taking the time value of money into account. —
Discounted payback period
The same, but using discounted cash flows — a more conservative estimate. —
Glossary of terms
- Initial investment
- The one-off amount spent to launch the project — equipment, refurbishment, opening inventory.
- Discount rate
- The minimum annual return you require from the investment (e.g. your loan rate or the yield of an alternative investment). It reflects the fact that a lari received today is worth more than a lari received in the future.
- Net cash flow (years 1–5)
- Cash coming into the project during the year minus cash going out. This is not accounting profit — only actual movements of cash.
- Net present value (NPV)
- The sum of future cash flows discounted to their present value, minus the initial investment. A positive NPV means the project will earn more than the required return.
- Internal rate of return (IRR)
- The project's own annual return — the rate at which NPV equals zero. If the IRR is higher than the discount rate, the project is attractive.
- Simple payback period
- How many years it takes for cash flows to recover the initial investment, without taking the time value of money into account.
- Discounted payback period
- The same, but using discounted cash flows — a more conservative estimate.
Results are indicative and do not constitute financial advice.