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).
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)
Let us take another example
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