NPV Calculator

NPV calculates the present value of all future cash flows from an investment, discounted at your required rate of return, minus the initial investment. A positive NPV means the investment creates value — it earns more than your discount rate. A negative NPV means it destroys value.

The discount rate reflects your opportunity cost and risk. For low-risk investments, some use the risk-free rate (CBN savings rate or T-bill rate, typically 10–15% in Nigeria). For business investments, 20–35% is more common given Nigeria's inflation and risk premium. Venture investments may use 40%+.

IRR (Internal Rate of Return) is the discount rate at which NPV = 0. If IRR > your required return (discount rate), the investment is attractive. NPV tells you absolute value created in Naira; IRR tells you the percentage return. Both are useful but NPV is generally preferred for comparing mutually exclusive projects.

Yes, especially in Nigeria where inflation is significant. You can either use nominal cash flows (including inflation) with a nominal discount rate, or real cash flows (inflation-adjusted) with a real discount rate. Be consistent — do not mix nominal cash flows with a real discount rate.

NPV is only as good as your cash flow estimates. In Nigeria, uncertainty is high — exchange rate risk, inflation, policy changes, and security factors can dramatically alter actual cash flows. Use scenario analysis (optimistic, base, pessimistic) and stress test your NPV with different discount rates.