 # 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) • 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.
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