Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment by comparing the present value of expected cash inflows with the present value of initial investment costs. Calculating NPV helps in making informed decisions about whether an investment is financially viable.

**Formula:** The formula for calculating NPV is straightforward. It involves discounting each future cash flow back to its present value and then subtracting the initial investment.

**How to Use:**

- Enter the initial investment amount.
- Provide the discount rate (percentage).
- Input the expected cash flows, separated by commas.
- Click the "Calculate" button.

**Example:** Suppose you have an initial investment of $10,000, a discount rate of 5%, and expected cash flows of $2,000 per year for 5 years. Entering these values and clicking "Calculate" will yield the NPV.

**FAQs:**

*What is Net Present Value (NPV)?*- NPV is a financial metric that evaluates the profitability of an investment by comparing present values of cash inflows and outflows.

*Why is NPV important?*- NPV helps assess the financial feasibility of an investment project, indicating whether it is expected to generate positive returns.

*How is the discount rate determined?*- The discount rate represents the cost of capital and is often determined based on the company's cost of borrowing or required rate of return.

*Can NPV be negative?*- Yes, a negative NPV implies that the investment may not meet the required rate of return, making it less attractive.

*Is NPV the only factor in investment decisions?*- No, NPV is one of many factors. Other considerations include risk, time horizon, and strategic alignment.

*What does a positive NPV indicate?*- A positive NPV suggests that the investment is expected to generate returns exceeding the cost of capital.

**Conclusion:** Mastering the calculation of Net Present Value is crucial for making informed investment decisions. This simple calculator and guide provide a hands-on approach to understanding NPV and its significance in financial analysis.