NPV
The NPV function returns the net present value of an investment based on a discount rate and a series of future payments (negative values) and income (positive values).
Syntax
NPV (Rate, value1,...valueN?) - > Number
Arguments
Rate
Number
The rate of discount
value1
Number, Node reference
The node that contains the order of cash flows for which you want to calculate the NPV. This is a required argument.
valueN?
Number, Node reference
The additional nodes that contains the order of cash flows for which you want to calculate the NPV. This is an optional argument
Example
Consider the below example of a project with an initial investment of $10,000 and cash inflows of $4,000 for the subsequent four years. Discount rate is 12%. The objective is to evaluate the project by calculating NPV.
Initial Investment
-10000
-
-
-
-
Cash Inflows
-
4000
4000
4000
4000
To achieve this, the following formula should be written in the [NPV] node:
NPV(12% ,[Cash Inflows].ALL_PERIODS)+[Initial Investment]
We are including .ALL_PERIODS in the formula so that it takes the value of the entire year's cash inflow rather a single period.
Result
NPV
2149.40
Last updated