The Net Present Value is described in detail on the Wikipedia Net Present Value page
The Excel NPV function calculates the Net Present Value of an investment, based on a supplied discount rate, and a series of future payments and income.
The format of the function is :
|rate||-||The discount rate over one period|
|value1, [value2], ...||-||
Numeric values, representing payments and income, where :
- negative values are treated as payments- positive values are treated as income
Note that :
Also note that in Excel 2007, you can provide up to 254 payment and income values to the Npv function, but in Excel 2003, you can only provide up to 29 values.
The spreadsheet on the right shows an example of the NPV function. The data used is shown in cells A1 - A7 of the spreadsheet and the NPV function is shown in cell B10.
This function gives the result $2,678.68
More examples of the Excel NPV function can be found on the Microsoft Office website