Excel NPV function

Function: NPV

Description: Excel NPV function (Net Present Value) in Microsoft Excel is used to calculate the net present value of an investment, taking into account the investment’s cash flows and the discount rate. The net present value represents the current worth of a series of future cash flows, taking into account the time value of money. A positive net present value indicates that the investment is expected to generate a positive return, while a negative net present value indicates that the investment is expected to generate a negative return.

The syntax for the NPV function is as follows:

Syntax: NPV(rate, value1, [value2], …)

Where:

• rate: The discount rate, or the required rate of return on the investment.
• value1: The first cash flow.
• [value2]: Optional. Additional cash flows.

Examples:

To calculate the net present value of an investment that will receive cash flows of $1,000 in year 1, $2,000 in year 2, and $3,000 in year 3 at a discount rate of 10%, you can use the following formula:

=NPV(10%, 1000, 2000, 3000)