Using the NPV function:
The arguments for the NPV function are:
|rate||Required||The rate of discount over the length of one period.|
|value1, value2, ...||Required||Value1 is required, subsequent values are optional. 1 to 254 arguments representing the payments and income.
• Value1, value2, ... must be equally spaced in time and occur at the end of each period.
•NPV uses the order of value1, value2, ... to interpret the order of cash flows. Be sure to enter your payment and income values in the correct sequence.
• Arguments that are empty cells, logical values, or text representations of numbers, error values, or text that cannot be translated into numbers are ignored.
• If an argument is an array or reference, only numbers in that array or reference are counted. Empty cells, logical values, text, or error values in the array or reference are ignored.
A couple more things:
|• The NPV investment begins one period before the date of the value1 cash flow and ends with the last cash flow in the list. The NPV calculation is based on future cash flows. If your first cash flow occurs at the beginning of the first period, the first value must be added to the NPV result, not included in the values arguments.|
|• NPV is similar to the PV function (present value). The primary difference between PV and NPV is that PV allows cash flows to begin either at the end or at the beginning of the period. Unlike the variable NPV cash flow values, PV cash flows must be constant throughout the investment.|