CTL: Net Present Value (NPV)
Eliza Helweg-Larsen
Published Date
This exercise complements our blog post and connects directly to the ROI Challenge, where leaders evaluate which investments truly create value for the company.
Continue the Learning: What’s Your Project Worth Today?
Try the NPV Calculator
Now that you’ve seen how Net Present Value works on paper, it’s time to experiment.
Use the calculator below to see how timing and return expectations affect a project’s value in today’s dollars.
Enter your numbers, adjust the assumptions, and see what changes.
Inputs:
- Initial investment – what you spend at the start
- Annual cash flow – what you expect back each year
- Number of years – how long the project generates returns
- Discount rate – your company’s expected return or cost of capital (often between 5–10 percent)
The calculator shows the present value of each year’s cash flow, totals them, and subtracts the initial investment to give the Net Present Value (NPV).
Explore the Levers
Change one thing at a time and watch the story unfold:
- Increase the discount rate — does the project lose value?
- Extend the timeline — what happens when returns stretch out?
- Lower the cash flow — how sensitive is the project to performance dips?
Every shift reveals how finance teams think about opportunity cost and timing.
Interpreting Your Result
If the NPV is positive, that’s a good sign — but not always the final word. Is it positive enough to outweigh risk, competition, or alternative uses of the same capital?
If it’s negative, that doesn’t always end the discussion either. Is it slightly negative because of conservative assumptions, or so far underwater that it clearly shouldn’t move forward?
That’s the kind of judgment finance teams bring to every major investment.
Apply It to Your Work — The ROI Challenge
Think of a project you’ve seen — a new system, a product line, a facility upgrade. Estimate the costs and expected returns. Then run the numbers through the calculator.
Is the NPV positive or negative? If positive, the project creates value — if negative, it consumes it.
That’s the same logic finance teams use when comparing capital requests.
Takeaway
Understanding NPV isn’t just about formulas — it’s about learning to see time and money the way your CFO does.
If the project you’re pitching is a significant capital investment, you’ll almost certainly be asked to show its NPV.
That’s how companies decide which initiatives deserve funding and which ones wait their turn.
Try the calculator. Play with the numbers.
Then look at your own initiatives through the same lens: what are they worth today?
Related reading: The ROI Challenge – How Business Acumen Drives Better Decisions