Calculate a project on the Calculator tab to see scenario analysis.
NPV Sensitivity Curves — Bear / Base / Bull
NPV across discount rates 0–30% for each scenario. The crossing point = IRR.
Sensitivity Matrix — NPV by Rate × CF Multiplier
Green = positive NPV. Red = negative. Gold border = your current inputs.
Run a calculation first to populate the sensitivity matrix.
Project A (from Calculator tab)
Calculate a project on the Calculator tab first, then return here to compare.
Project B
Cash Flows (Years 1–5)
Metric Comparison Chart
Incremental Analysis (A − B)
Calculating…
Frequently Asked Questions
What is Net Present Value (NPV)?
NPV is the sum of all discounted present values of future cash flows minus the initial investment. It answers: "How much value does this project create today?" A positive NPV means the project generates more return than your cost of capital — it creates wealth in today's dollars. It is the single most important metric in capital budgeting.
What discount rate should I use?
Use the opportunity cost of capital — the return you could achieve on an alternative investment of similar risk. For business projects, this is usually WACC (8–12%). For personal investments, use your required return (e.g., 10% for equity-like risk). For risk-free comparison, use the current 10-year Treasury yield (4.5–5.5%). The preset chips above cover common use cases.
How do I enter cash flows for different project types?
Enter the initial investment as a positive number in the "Initial Investment" field — it is automatically treated as a Year 0 outflow. For Years 1–12, enter each year's expected net cash flow. Cash flows can be positive (income, cost savings) or negative (additional capex, maintenance). Leave unused years at zero. Use the +Add Year button to extend up to 12 years.
What is the Profitability Index (PI)?
PI = PV of future cash flows / Initial Investment. A PI greater than 1.0 means positive NPV — the same decision as accepting the project. Use PI when comparing projects of different sizes: a PI of 1.5 means you earn $1.50 in present value for every $1 invested. PI is the go-to metric for capital rationing (ranking projects when budget is limited).
What is the relationship between NPV and IRR?
NPV and IRR are two sides of the same coin. NPV tells you dollar value created at a specific discount rate. IRR is the rate where NPV = 0. If your discount rate is below the IRR, NPV is positive (accept). If your discount rate exceeds IRR, NPV is negative (reject). The NPV Curve chart on Tab 1 shows this relationship visually — the x-axis crossing is the IRR.
What is discounted payback and how does it differ from simple payback?
Simple payback counts raw years until cumulative cash flows equal the investment — no discounting. Discounted payback uses present values instead, making it more conservative: it shows when the investment is recovered in today's dollars. A project with a 3-year simple payback might have a 4-year discounted payback at a 10% rate. The Cumulative PV chart shows the discounted payback crossing point visually.
Can NPV be negative even for a profitable project?
Yes. "Profitable" in accounting terms means revenues exceed costs. But an accounting profit can have a negative NPV if the return is insufficient given the risk and time value of money. For example, a project returning 8% annually is profitable but has negative NPV if your cost of capital is 12%. NPV is a tougher, more rigorous test.
How do I use the Scenario Analysis and Project Comparison tabs?
Scenario Analysis (Tab 2) shows Bear (−20% CFs), Base, and Bull (+20% CFs) outcomes plus a sensitivity matrix — invaluable for understanding how sensitive your NPV is to forecast errors. Project Comparison (Tab 3) lets you enter a second project and compare NPV, IRR, PI, and payback side by side. The winner banner and incremental analysis show which project creates more absolute value.