Excel How ToLesson 124Free preview

NPV (Net Present Value)

This lesson is part of Excel · All levels

Summary

Calculating Net Present Value (NPV) allows us to judge whether an investment is worthwhile based on the value of money today. So, you put the cash flow per period and the discount rate into the NPV function, and then you adjust it to the initial investment outside the function.

Key points

Enter the cash flow of period 1, 2, 3,... into the NPV argument
Discount rates are written as decimal, for example 0.1 to 10%.
Initial investments of period 0 summed up or subtracted from NPV
The positive NPV indicates the yield above the discount rate

Full lesson

Code examples and quizzes

Full lessons, code examples, and quizzes are available to subscribers. 5 questions.