Annuity Net Present Value Calculator
Discount a series of equal payments back to today's dollars, then subtract the initial outlay to judge whether an annuity meets your return requirements. Enter cash flow size, discount rate, number of periods, and the upfront cost.
Financial estimates only; consult a professional for investment decisions.
Examples
- $1,000 per period, 5% discount rate, 5 periods, $4,000 upfront ⇒ $3,329.48 NPV
- $500 per period, 7% discount rate, 10 periods, $2,000 upfront ⇒ $2,019.97 NPV
- $2,000 per period, 4% discount rate, 3 periods, $5,000 upfront ⇒ $695.14 NPV
FAQ
What does the discount rate represent?
It captures the minimum return you expect; higher rates reduce present value because future cash is discounted more heavily.
Can I model monthly or quarterly payments?
Yes. Enter the per-period cash flow and the periodic discount rate (annual rate divided by the number of periods per year).
Why can't periods be fractional?
The standard formula assumes whole periods. For partial periods, convert to smaller intervals (e.g., months) and adjust the rate accordingly.
How do taxes and fees affect the result?
This calculator ignores taxes, commissions, and inflation adjustments—subtract those amounts from cash flows or the initial investment for a more realistic estimate.
Additional Information
- Uses the ordinary annuity present value formula PV = C × [1 − (1 + r)^−n] / r, then subtracts the initial investment.
- A positive NPV indicates the annuity beats the discount rate and may be worth pursuing.
- Discount rates typically reflect required return, opportunity cost, or inflation expectations.
- Assumes payments are received at the end of each period. For annuities due (payments at the beginning), multiply the present value factor by (1 + r).