How Do You Calculate A Net Present Value Using Excel?
Net present value is a tool you can use to evaluate the profitability of an investment or project. It compares the present value of the cash inflow from the investment to its cash outflow, telling you the value of the investment. You can use Microsoft Excel to determine net present value and the quality of the investment you are considering. Do your homework. You will need to know the initial investment required and any additional costs you will be paying. You will also need to know the income you will be earning from the investment and the interest rate your investment will earn. Enter the above data in a column in an Excel spreadsheet. Use negative numbers to indicate the money you are paying, while the income can be left as positive numbers. Go to Excel’s function wizard and choose NPV from the financial category. For rate, enter the interest rate as a decimal, not as a percent. Enter all cell descriptors of all the values except the initial cost. For example, [C2:C4]. Subtract your
