Question 1

What is NPV (Net Present Value)?

Accepted Answer

NPV is the difference between the present value of cash inflows and outflows over a period of time. A positive NPV indicates that the investment is profitable.

Question 2

What is IRR (Internal Rate of Return)?

Accepted Answer

IRR is the discount rate that makes the NPV of all cash flows equal to zero. It represents the expected annual growth rate of an investment.

Question 3

How do I interpret the NPV result?

Accepted Answer

NPV > 0: Investment is profitable. NPV = 0: Breaks even. NPV < 0: Investment destroys value and should be avoided.

Question 4

What discount rate should I use?

Accepted Answer

The discount rate typically reflects your cost of capital or required rate of return. Common choices include WACC, expected market return, or inflation rate plus a risk premium.

Question 5

Is this NPV IRR calculator free?

Accepted Answer

Yes, this tool is completely free with no limitations. No registration required. All calculations are performed in your browser.

Question 6

Why can't IRR be calculated sometimes?

Accepted Answer

IRR requires at least one sign change in the cash flows (typically negative initial investment followed by positive returns). If all cash flows are positive or all negative, IRR has no solution.

Question 7

What's the difference between NPV and IRR?

Accepted Answer

NPV gives you an absolute dollar value, while IRR gives a percentage return rate. Both should be used together for complete analysis.

Question 8

How do I calculate NPV in Excel?

Accepted Answer

Use =NPV(rate, value1, [value2], ...) + initial_investment. Note that Excel's NPV assumes cash flows start at period 1, so add the initial investment separately.

Question 9

How do I calculate IRR in Excel?

Accepted Answer

Use =IRR(values, [guess]). Include all cash flows from period 0 (initial investment as negative) through the final period.

Question 10

What if I have irregular cash flow periods?

Accepted Answer

For irregular periods, use XNPV and XIRR functions in Excel which account for specific dates. This calculator assumes regular annual periods.

Question 11

Can I use this for real estate investment analysis?

Accepted Answer

Yes! Enter purchase price as initial investment (negative), annual rental income minus expenses as cash flows, and expected sale price in the final year.

Question 12

How is this different from ElyxAI?

Accepted Answer

This free calculator handles basic NPV/IRR calculations. ElyxAI is a powerful AI agent that works directly in Excel to automate complex financial modeling and analysis. Try ElyxAI free for 7 days!

NPV & IRR Calculator

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