NPV

The NPV function returns the net present value of an investment based on a series of potentially irregular cash flows that occur at regular time intervals. All arguments are number values.

NPV(periodic-discount-rate, cash-flow, cash-flow…)

periodic-discount-rate: The discount rate per period. periodic-discount-rate is entered as a decimal (for example, 0.08) or with a per cent sign (for example, 8%). periodic-discount-rate must be greater than or equal to 0. periodic-discount-rate is specified using the same time frame as that used for the cash flows. For example, if the cash flows are monthly and the desired annual discount rate is 8%, periodic-discount-rate must be specified as 0.00667 or 0.667% (0.08 divided by 12).

cash-flow: A cash flow. A positive value represents income (cash inflow). A negative value represents an expenditure (cash outflow). Cash flows must be equally spaced in time.

cash-flow…: Optionally include one or more additional cash flows.

Notes

The currency shown in this function result depends on your Language & Region settings (in System Preferences in macOS and in Settings in iOS and iPadOS), or on your Time Zone & Region settings in iCloud Settings.

Example
Suppose you are presented with the opportunity to invest in a partnership. Because the partnership is still developing its product, an additional £25,000 and £10,000 must be invested at the end of the first and second years (negative cashflows), respectively. In the third year, the partnership expects to be self-funding but not return any cash to investors (0 cashflow). In the fourth and fifth years, investors are projected to receive £10,000 and £30,000 (positive cashflows), respectively. At the end of the sixth year, the company expects to sell and investors are projected to receive £100,000 (positive cashflow). In order to invest, you want to achieve an annual return of at least 10%. =NPV(0.10, –25000, –10000, 0, 10000, 30000, 100000) returns £50,913.43, the net present value of the cash flows at 10%. Therefore, if the required initial investment is this amount or less, this opportunity meets your 10% goal.

Example

Suppose you are presented with the opportunity to invest in a partnership. Because the partnership is still developing its product, an additional £25,000 and £10,000 must be invested at the end of the first and second years (negative cashflows), respectively. In the third year, the partnership expects to be self-funding but not return any cash to investors (0 cashflow). In the fourth and fifth years, investors are projected to receive £10,000 and £30,000 (positive cashflows), respectively. At the end of the sixth year, the company expects to sell and investors are projected to receive £100,000 (positive cashflow). In order to invest, you want to achieve an annual return of at least 10%.

=NPV(0.10, –25000, –10000, 0, 10000, 30000, 100000) returns £50,913.43, the net present value of the cash flows at 10%. Therefore, if the required initial investment is this amount or less, this opportunity meets your 10% goal.

See alsoIRR PV

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NPV

Notes