What does this tool do
The Investment Return Calculator computes NPV (Net Present Value), IRR (Internal Rate of Return), and ROI (Return on Investment) for a series of cash flows. Enter the initial investment and subsequent cash flows (positive or negative). Set a discount rate for NPV. View payback period and break-even analysis. Useful for evaluating projects, comparing investments, and understanding profitability.
How to use it
- Enter initial investment — The upfront cost (positive number).
- Enter cash flows — Add inflows and outflows for each period. Positive = cash in, negative = cash out.
- Set discount rate — The rate used for NPV (e.g. 8 for 8%).
- View results — NPV, IRR, ROI, and payback period.
- Adjust — Change flows or rate to see sensitivity.
How it works
NPV: NPV = Σ [ CF_t / (1 + r)^t ] − C0 — sum of discounted cash flows minus initial investment. IRR: The discount rate where NPV = 0, solved iteratively via Newton-Raphson. Returns null when there is no sign change in cash flows (all positive or all negative). ROI: (Total Returns − Initial) / Initial × 100. Payback: The period when cumulative cash flow turns positive. Non-convergence of IRR is reported as non-computable.
All calculations run entirely in your browser. No data is sent to any server.
Use cases & examples
- Project evaluation — Compare projects by NPV.
- Capital budgeting — Decide whether to invest.
- IRR threshold — Check if IRR exceeds your required return.
- ROI reporting — Quick percentage return metric.
- Sensitivity — Test different discount rates.
Example
- Initial: $10,000. Flows: $2,000, $3,000, $4,000, $5,000. Rate: 8%
- NPV: positive if discounted inflows exceed $10,000.
- IRR: the rate that makes NPV = 0.
Limitations & known constraints
- IRR uniqueness — Multiple IRRs possible for unconventional cash flows; solver returns one.
- Newton-Raphson — May not converge for extreme cash flow patterns.
- No inflation — Assumes nominal cash flows; adjust rate for real analysis.
- Single scenario — No Monte Carlo or scenario analysis.