NPV
Formulas / NPVCalculate the net present value of an investment.
NPV(rate,value1,[value2],...)
- rate - the rate of discount for the length of the period
- value1 - a value representing a series of payments and income
Examples
=NPV(0.1,C2:C5)The NPV function can be used to calculate the present value of a series of cash flows. For example, this will calculate the present value of the cash flows in cell range C2 to C5, where 0.1 is the discount rate.
=NPV(0.1,C2)+C3The NPV function can also be used to calculate the present value of an individual cash flow. For example, this will calculate the present value of the cash flow in cell C2, plus the cash flow in cell C3, where 0.1 is the discount rate.
=NPV(F4,C6:C10)+C5The NPV function can be used to calculate the net present value of a single investment. For example, this will calculate the present value of the investment in cell C5, where F4 is the investment in cell C6, C5 is the investment in cell C5, and NPV is the notation for the present value of a cash flow.
=NPV(0.1,C2:C5)*C6The NPV function can be used to calculate the present value of a series of cash flows that are not the same amount. For example, this will calculate the present value of the cash flows in cell range C2 to C5, multiplied by the cash flow in cell C6, where 0.1 is the discount rate.
Summary
The NPV function is used to calculate the net present value of an investment using a discount rate. It takes a series of future payments as arguments, with negative values representing costs and positive values representing income. The income is then used to calculate the present value of the investment.
- The NPV function calculates the present value of an investment based on a series of future cash flows.
- The cash flows must be in chronological order, with the earliest cash flow being the first argument.
Frequently Asked Questions
What is the NPV function?
What are the arguments for the NPV function?
What are the requirements for the future payments?
