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<< Click to Display Table of Contents >> NPV (net present value) |
Syntax:
NPV(Rate, Value1 [, Value2, Value3 ...])
Description:
Returns the net present value of an investment based on regular cash flows and a fixed discount rate.
The function expects the following arguments:
Rate is the discount rate (per payment period).
Value1, Value2, etc. are the cash flows. You can specify either single values or a cell range. Important: All cash flows have to occur at the end of each period.
Payments have to be entered as negative values, incomes as positive values. The cash flows do not have to be even but they must occur in regular intervals (at the end of each period) and be entered in their actual order, namely, cash flow for the first period, cash flow for the second period, etc.
A zero has to be entered for periods where no cash flow occurred.
Differences to the PV function:
1. With NPV, cash flows of different amounts are possible, with PV they have to be even.
2. With NPV, cash flows must occur at the end of each period; with PV they can also be made at the beginning of the period.
Example:
NPV(6.5%, 4000, 5000) returns 8164.16
See also: