Calculate the net present value of a series of future cash flows.
Syntax
NPV(rate, value1, [value2], …)Arguments
raterequired
Discount rate per period.
value1…required
Future cash flows (periodic).
NPV discounts a series of periodic cash flows back to today's value at a given rate — a core tool for investment and project appraisal. Note Excel's NPV assumes the first cash flow is one period away; add the initial outlay (time 0) outside the function.
=NPV(0.1, C2:C6) + C1→$1,840Discounts C2:C6 at 10% and adds the time-0 outlay in C1.
Set the discount rate
Use the per-period rate.
Add the initial outlay separately
NPV excludes time 0 — add it outside.
Excel's NPV discounts every argument by at least one period, so a time-0 investment must be added separately.