Net Present Value Calculator in Microsoft Excel 2010

In this article we will learn about the Net Present Value Calculator in Microsoft Excel 2010.

The Net Present Value (NPV) returns the net present value of an investment based on periodic, constant payments and a constant interest rate.

Net present value is calculated using a discount rate (which may represent an interest rate or the rate of inflation) and a series of future payments (negative values) and income (positive values).

Syntax: =NPV(rate,value1,value2,…)
Arguments

Rate is the periodic discount rate over the length of the project

Value1, Value2, ……..Value n will be the value of the specific period on which calculation is based.

Value1 and Value2 are 1 to 29 arguments representing the payments and income. These value sets must be equally spaced in time and occur at the end of each period.
Let us understand more with an example:

Let us consider we have invested $100,000 in a machine.The additional cash inflows (net income + depreciation) from the machine will be $55,000, $ 65,000, and $80,000 over the next three years. Interest Rate is 6%. We want to calculate the Net Present Value (NPV)

img1

  • Formula we use in cell B7 =NPV(B5,B2,B3,B4)-100000
  • We will get the below mentioned result

img2

  • We have subtracted the Initial Investment to get the real NPV

Let us take another example

  • Consider an investment of $ 50,000
  • 32,000, 35,000 & 28,000 are the figures that show the Income of the first three years respectively.
  • On the basis of 10% Discount Rate, we want to find out the Net Present Value (NPV)

img3

  • We will enter NPV formula in cell B7=NPV(B5,B1,B2,B3,B4)
  • We will get the desired result

img4

  • Value in cell B5 is the Discount Rate
  • Cell B1 is the Investment
  • B2, B3 & B4 show the Income for every year.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Terms and Conditions of use

The applications/code on this site are distributed as is and without warranties or liability. In no event shall the owner of the copyrights, or the authors of the applications/code be liable for any loss of profit, any problems or any damage resulting from the use or evaluation of the applications/code.

Visit Us On TwitterVisit Us On FacebookVisit Us On Google PlusVisit Us On Youtube