How to Calculate NPV, NFV, and Discounted Payback Period with CALC 1

Using the Cash Flows Calculator

See the CALC 1 Cash Flows Calculator Video for a demonstration of calculating cash flows.

Case Study: Tom's Tech Startup Investment

Tom is considering investing in a tech startup. The investment requires $100,000 upfront and promises the following returns over 5 years:

Year	Cash Flow
0	-100,000
1	20,000
2	30,000
3	40,000
4	50,000
5	60,000

Tom's required rate of return is 10%. Let's calculate NPV, NFV, and DPB:

Value	Keystrokes	Display	Description
	shift + C cf		Clears the financial list.
1	STO P/YR	1.00	Stores the payments per year.
-100000	CF0	-100,000.00	Stores the initial investment.
20000	CFj	20,000.00	Stores the Year 1 cash flow.
30000	CFj	30,000.00	Stores the Year 2 cash flow.
40000	CFj	40,000.00	Stores the Year 3 cash flow.
50000	CFj	50,000.00	Stores the Year 4 cash flow.
60000	CFj	60,000.00	Stores the Year 5 cash flow.
	shift Σf	100,000.00	Calculate the sum of the cash flows to verify the entries.
10	STO I/YR	10.00	Stores the annual discount rate.
	NPV	44,433.75	Calculates the NPV.
	shift, NFV	71,561.00	Calculates the NFV.
	shift, DPB	3.79	Calculates the Discounted Payback

The History Detail

Calculates the Net Present Value
          10.00 : The Annual Rate.
           1.00 : The periods per year.
       44433.75 : The net present value.
List: listf
-100000.00
20000.00
30000.00
40000.00
50000.00
60000.00

Calculates the Net Future Value.
          10.00 : The Annual Rate.
           1.00 : The periods per year.
       71561.00 : The net future value.
List: listf
-100000.00
20000.00
30000.00
40000.00
50000.00
60000.00

Calculates the Discounted Payback
          10.00 : The discount rate.
           1.00 : The periods per year.
           3.79 : The discounted payback.
List: listf
-100000.00
20000.00
30000.00
40000.00
50000.00
60000.00

The investment has a positive NPV of $44,433.75, suggesting it's a good opportunity. The NFV of $71,561.00 represents the investment's value at the end of 5 years. The Discounted Payback Period of 3.79 years indicates Tom will recover his investment (accounting for the time value of money) in about 3 years and 10 months.

Tips for Cash Flow Analysis

• Always clear the financial list (list f) before starting a new calculation.
• Use the shift Σf function to verify your cash flow entries.
• For monthly cash flows, set P/YR to 12 to calculate annual rates.
• Use the List Manager to edit, reorder, add, or delete cash flow values.
• Tap the plot key to gain insights that might not be immediately apparent from the numbers alone.
• Remember that negative values represent outflows (investments) and positive values represent inflows (returns).
• Always check the History Detail to verify your inputs and results.

Further Reading

• Net Present Value (NPV)
• Discounted Payback Period