How to read it
NPV brings every future cash flow back to today at the discount rate. A positive NPV means the project earns more than that rate. IRR is the rate that makes NPV zero. Payback is when the cash flows cover the investment.
Example
$100,000 invested, with cash flows of 30, 35, 40, 40 and 30 thousand, at an 8% discount rate: NPV is positive and the IRR is about 21.68%, with payback in 2.9 periods.
Frequently asked questions
Which discount rate?
Your cost of capital or the return you could get elsewhere with similar risk.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.