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 percent 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 the time frame 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 and Region settings (in System Preferences in macOS and in Settings in iOS and iPadOS), or on your Time Zone and 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