| NPV Function |
Named Arguments
Yes
Syntax
NPV(rate, values() )
rate
Use: Required
Data Type: Double
The discount rate over the period, expressed as a decimal.
values()
Use: Required
Data Type: Double
An array of cash flow values.
Return Value
A Double specifying the net present value.
Description
Calculates the net present value of an investment based on a series of periodic variable cash flows (payments and receipts) and a discount rate. The net present value is the value today of a series of future cash flows discounted at some rate back to the first day of the investment period.
Rules at a Glance
rate must be a percentage expressed as a decimal. For example, 10% is expressed as 0.10.
values is a one-dimensional array that must contain at least one negative value (a payment) and one positive value (a receipt).
The NPV investment begins one period before the date of the first cash flow value and ends with the last cash flow value in the array.
NPV requires future cash flows. If the first cash flow occurs at the beginning of the first period, the first value must be added to the value returned by NPV and must not be included in values.
Programming Tips and Gotchas
rate and the individual elements of values must reflect the same time period. For example, if values reflects annual cash flows, rate must be the annual discount rate.
Individual members of values are interpreted sequentially. That is, values(0) is the first cash flow, values(1) is the second, etc.
NPV is like the PV function, except that PV allows cash flows to begin either at the beginning or the end of a period and requires that cash flows be fixed throughout the investment.