NPV Function - Excel
Overview
The NPV function in Excel is a useful tool for calculating the net present value of a series of cash flows. This function is used to assess the profitability of an investment or project by discounting the future cash flows to their present value and subtracting the initial investment.
Example:
=NPV(0.1, -100000, 20000, 25000, 30000)
Syntax:
=NPV(rate, value1, [value2], ...)
rate: This is the discount rate to be applied to the cash flows.
value1, value2, ...: These are the individual cash flows over the investment period.
Example
In the example above, the NPV function takes the rate that is in C2 and the values that are in cells C3 through C7 to calculate the net present value. The final output equals 1033.83.