NPV Function
Learning Objectives:
- Learning the purpose behind the net present value function.
Net Present Value (NPV) Function
The NPV function calculates the Net Present Value of an investment using a discount rate and a series of future cash flows. The purpose of this function is to help decide whether an investment is positive in the future.The syntax is:
= NPV(rate, value 1, value 2,...)
Rate = discount rate per period Value1, value2… = series of cash flows occurring at the end of each period To use this function, use `=NPV`.
Note: The NPV function discounts from the first period, so the initial investment must be added after the function to get the correct total.