In this article, we will learn How to get a Net Present Value Calculator in Microsoft Excel 2010.

**Net Present value**

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).

**NPV function 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’s use it in an example to understand it.

Here one amount is debited and other amounts are credited at an interest of 10%.

Use the formula in D3 cell.

=NPV(C3, A3:A7)+A2 |

Press **Enter.**

It means the net present value of the whole expense is $789.

This amount is to be debit.

Let us consider another example 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)

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

- 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)
- We will enter NPV formula in cell B7
**=NPV(B5,B1,B2,B3,B4)** - We will get the desired result
- Value in cell B5 is the Discount Rate
- Cell B1 is the Investment
- B2, B3 & B4 show the Income for every year.

**Here are some observational notes shown below.**

**Notes:**

- Type argument is not default in this function, throws an error "you've entered too few arguments for this function", If argument is not used.
- The formula only works with numbers only, returns #VALUE! Error if any argument is non-numeric.
- Do not use negative numbers in the argument as the formula generate #NUM! Error.
- If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use
**rate/12**for monthly rate. Use rate directly 12%, if calculating for annual payments - If the start period < 1, end period < 1 or Start period > end period, the formula returns #NUM! Error.
- Type argument other than 0 or 1, the formula returns #NUM! error.

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