Manuals/calci/NPV

NPV()

• First parameter is the discount rate for the period.
• From the second parameter indicates the payments and income.
  • NPV(), returns the net present value of an investment based on a series of periodic cash flows and a discount rate.

Description

• This function gives the net present value of an investment.
• Net present value is the difference between the present value of cash inflows and the present value of cash outflows.
• The $NPV$ analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.
• In $NPV()$, first parameter is the discount rate for one period.
• From the second parameter are representing the payments and income.
• Payments are equally spaced in time and occur at the end of the period.
• Arguments can be numbers ,empty cells,logical values or text representations of numbers.
• But error values or text that cannot be translated in to numbers.
• $NPV$ is related with the functions $PV$ and $IRR$.
• The cash flows to begin either at the end or at the beginning of the period is the main difference between $NPV$ and $PV$.
• Also $IRR$ is the rate for which $NPV$ equals zero.$NPV(IRR(....),...)=0$.
• The formula for $NPV$ is:

$NPV=\sum _{i=1}^{n}{\frac {values_{i}}{(1+rate)^{i}}}$,where $n$ is the number of cash flows in the list of values.

Examples

1. =NPV(9%,-55000,2000,3500,6200,8500,10000) = -30193.387068
2. =NPV(6%,-2000,294,489,780,520,1250) = 673.05
3. =NPV(12%,-25000,3000,7500,4200,5100,12700,10000) = 1929.2652056111

Related Videos

NPV Function

See Also

• FV
• IRR
• PV

References

• Net Present Value

• List of Main Z Functions

• Z3 home