Calculating Net Present Value and Internal Rate of Return

Thinking about cashing in your structured settlement or annuity for a single lump sum payment? Wondering how much to pay for a business with a predictable cash flow? When considering how much a future cash flow is worth in today's dollars, simply adding up the total amount of the payments will not provide an accurate value, due to the time value of money, as a dollar a year from now is worth less than a dollar today.

Well I have good news: instead of dusting off your finance books and wrapping your brain around the tedious math involved, you can use Sporkforge.com's Cash Flow Value & Rate of Return Calculator: it will do the calculations for you. All you need to do is type or paste a list of regular income amounts (or even negative amounts representing outgoing payments, for example future liabilities), set the payment period (weekly, monthly, etc), and specify the interest rate at which to discount future sums of money. It will then, with the push of a button, calculate for you the net present value of the future cash flow, which is today's lump sum value of the cash flow. What could be easier?

But wait, there's more! Suppose you are offered a specific value for your structured settlement payments or small business, and you want to figure out what interest rate the person making the offer would be earning on the deal, or the internal rate of return of the "investment" of the lump sum in return for the future series of payments. Simply enter the lump sum amount in the "present-day value" field, under the "Calculate Internal Rate of Return" section of the calculator, and press the "Calculate rate of return..." button. You will then be informed of the rate of return the person making the offer would be realizing.

And hey, it's free. What's not to like? Give it a spin and see for yourself.