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<< Click to Display Table of Contents >> NPV (net present value) |
Syntax:
NPV(Rate, Value1 [, Value2, Value3 ...])
Description:
This returns the net present value of an investment based on regular cash flows and a fixed interest rate.
The function expects the following arguments:
Rate is the interest 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.
The cash flows may vary in size and consist of incomes (positive values) and payments (negative values). However, they must occur at 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. Cash flows of different amounts are possible for NPV, while they have to be constant amounts for PV.
2. For NPV, cash flows must occur at the end of each period; for PV, they can also be made at the start of the period.
Example:
NPV(6.5%, 4000, 5000) returns 8164.16
See also: