1. What is NPV Without Initial Investment?

The NPV (Net Present Value) without initial investment calculates the present value of future cash flows without considering any upfront costs. It helps evaluate the absolute value of future cash flows in today's terms.

2. How Does the Calculator Work?

The calculator uses the NPV formula:

Where:

• \( CF_t \) — Cash flow at time period t (USD)
• \( r \) — Discount rate (%)
• \( t \) — Time period (years)

Explanation: The formula discounts each future cash flow back to its present value using the discount rate, then sums all these present values.

3. Importance of NPV Calculation

Details: NPV is crucial for investment analysis, capital budgeting, and financial decision making. It accounts for the time value of money and helps compare projects with different cash flow patterns.

4. Using the Calculator

Tips: Enter future cash flows as comma-separated values (e.g., "100,200,300"), the discount rate as a percentage. All values must be valid (cash flows can be positive or negative, rate ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: When would I use NPV without initial investment?
A: When evaluating future cash flows from an existing asset or when initial costs are already sunk and irrelevant to the decision.

Q2: How does this differ from standard NPV?
A: Standard NPV includes the initial investment (usually as a negative CF0), while this version starts with the first future cash flow.

Q3: What discount rate should I use?
A: Typically the company's cost of capital or the required rate of return for the project's risk level.

Q4: Can cash flows be negative?
A: Yes, negative values represent outgoing cash flows in future periods.

Q5: What does a positive NPV indicate?
A: A positive NPV suggests the future cash flows are worth more than their cost in present value terms.