| | | To calculate the net present value for a series of cash flows that are not periodic, use the XNPV() function. |
| | | This function calculates the net present value of an investment by using a discount rate and a series of future payments (negative values) and income (positive values). |
| | | Any cash inflows must be represented with positive values. |
| | | Any cash outflows must be represented with negative values. |
| | | This function returns the sum of a series of regular cash flows, discounted to the present day using a single discount rate. |
| | | If an investment has a net present value greater than zero, then it’s a good investment. |
| | | The exact order of the values "value1", "value2", ... is used to interpret the order of cash flows. |
| | | The values "value1", "value2", ... must be equally spaced in time and occur at the end of each period. |
| | | The investment begins one period before the date of the "value1" cash flow and ends with the last cash flow in the list. |
| | | The "value1" is assumed to be received at the end of the first period. |
| | | If your first cash flow occurs at the beginning of the first period, the first value must be added to the result and NOT included in the arguments to the function. |
| | | Arguments that are numbers, empty cells, logical values, or text representations of numbers are counted. |
| | | Arguments that are error values or text that cannot be translated into numbers are ignored. |
| | | Empty cells, logical values, text, or error values in the array or reference are ignored. |
| | | If an argument is an array or reference, only numbers in that array or reference are counted. |
| | | You can have a maximum of 29 value arguments. |
| | | This function is similar to the PV() function although this one uses a fixed cash flow value but does allows cash flows to begin either at the end OR at the beginning of the period. |
| | | This function is also related to the IRR() function. IRR is the rate for which NPV equals zero: NPV(IRR(...), ...) = 0. |
| | | Example 1 - Suppose you're considering an investment in which you pay $10,000 one year from today and receive an annual income of $3,000, $4,200, and $6,800 in the three years that follow. Assuming an annual discount rate of 10 percent, what is the net present value of this investment ? |
| | | | A | B | C | | 1 | =NPV(10%,-10000,3000,4200,6800) = £1,188.44 | 10% | 1000 | | 2 | =NPV(10/100,-10000,3000,4200,6800) = £1,188.44 | | 2000 | | 3 | =NPV(10/100,-10000,-3000,4200,6800) = -£3,770.23 | | 3000 | | 4 | =NPV(10%,1000,2000,3000) = £4,815.93 | | | | 5 | =NPV(B1,C1:C3) = £4,815.93 | | |
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