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NPV calculator Online - Net Present Value calculation in excel

Posted By sam.36 on Dec 15, 2009   FROM: office.microsoft.com report abuse

Net Present Value calculation in excel is used to calculate your NPV based on data of cash investment, expected cash return and expected discount percentage. The Syntax of NPV is rate, value1, value2 ... in which Rate means the rate of discount over the length of one period. Value1, value2 ... are 1 to 29 arguments which represents the payments and income. This value must be taken place at the end of each period and equally spaced in time. You have to enter your payment and income values in right sequence. If an argument is a range or reference, only numbers in that range or reference are calculated. While other things like Empty cells, logical values, text, or error values in the array or reference are unobserved. Arguments that are numbers, empty cells, logical values, or text representations of numbers are calculated while error values or text cannot be translated into numbers and are unobserved

The formula of NPV is,

NPV calculator Online - Net Present Value calculation in excel

How to calculate NPV:

  • First enter number of years
  • After that, initial cost i.e. investment
  • Now enter periodic outflows and inflows
  • After that, write internal rate of return and alternative interest rate
  • Lastly enter transfer entries to table option and then press calculate button.

If you want to delete table press delete table option and for help, click here.

Example of calculate NPV:

A
B
Data
Description
Formula
Description (Result)
8% Annual discount rate. This might represent the rate of inflation or the interest rate of a competing investment.
-40,000 Initial cost of investment
8,000 Return from first year
9,200 Return from second year
10,000 Return from third year
12,000 Return from fourth year
14,500 Return from fifth year
=NPV(A2, A4:A8)+A3 Net present value of this investment (1,922.06)
=NPV(A2, A4:A8, -9000)+A3 Net present value of this investment, with a loss in the sixth year of 9000 (-3,749.47)

In the above  example, you don't include the initial $40,000 cost as one of the values, because the payment occurs at the beginning of the first period.

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