Npv calculator with steps

The correct NPV formula in Excel uses the NPV function to calculate the present value of a series of future cash flows and subtracts the initial investment.

Net Present Value

For example, project X requires an initial investment of $100 (cell B5).

1.

We expect a profit of $0 at the end of the first period, a profit of $50 at the end of the second period and a profit of $150 at the end of the third period.

2. The discount rate equals 15%.

Explanation: this is the rate of return of the best alternative investment.

For example, you could also put your money in a high-yield savings account at an interest rate of 15%.

3.

Xnpv formula excel

The NPV formula below calculates the net present value of project X.

Explanation: a positive net present value indicates that the project’s rate of return exceeds the discount rate. In other words, it's better to invest your money in project X than to put your money in a high-yield savings account at an interest rate of 15%.

4.

The NPV formula below calculates the net present value of project Y.

Explanation: the net present

how do we calculate npv in excel

how do you calculate npv in excel for monthly cash flow