How to Calculate Net Present Value (Npv) in Excel

In this tutorial, you will learn to calculate Net Present Value, or NPV, in Excel.

In this tutorial, you will learn to calculate Net Present Value, or NPV, in Excel. Net Present Value is a financial function that is calculated for an investment, and it represents the present value of the investment minus the amount of money that costs to buy in. Excel offers a preset function for this called NPV. Please be aware that all the investment cash flows must occur at the same interval for the calculation to be accurate.

NPV has two arguments: rate — which refers to the discount rate, and the range of values that contains future cash flows.

Step 1: Open the document in which you want to calculate NPV.

Step 2. Go to the cell where you want the function to be calculated, and type the following:

= npv (our discount rate /12 as the rate is compounded monthly, the range of values you want to be considered)+the initial investment, in our case the starting 100,000$.

Step 3. Excel will calculate for you the Net Present Value of this investment.

Step 4. Go to the cell that you want to hold the NPV result for comparison, and type:

=npv(the same discount rate/12,the range of values)+the initial investment. Hit Enter.

Step 5. Excel will calculate for you the Net Present Value of this investment.

Step 6. Now that we see both results, we will agree that the first option is better and proceed with it.

Result: Congratulations, you have learned how to calculate the Net Present Value in Excel.

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  • ❗ Subscribe To Our Main YouTube Channel

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    Excel, Word and PowerPoint Tutorials from Howtech June 19, 2020 12:45 pm Reply
  • Why dont need to minus Initial Investment
    ? THE EXCEL SHOW THAT YOUR NPV IS ADD Initial Investment

    i

    蛋包飯188元 June 19, 2020 12:45 pm Reply
  • the end card thing sucks make the time shorter its covering half the screen.

    Isaac Hite June 19, 2020 12:45 pm Reply
  • It seems wrong. To calculate the PV of the $25,000, we compute PV of an Annuity.

    $25,000/0.07 * ( 1 – [ 1 / (1.07^5) ] ) which is = $102,504.9359 and then subtract the initial investment of -$100,000; total NPV = $2,504.94

    dembh June 19, 2020 12:45 pm Reply
  • A million thanks from Toronto 🙂

    Mert Beloglu June 19, 2020 12:45 pm Reply
  • This is much better than some Indian youtuber explanations.

    Paul June 19, 2020 12:45 pm Reply
  • stupid annoying music in the background. How dumb!

    Dhyana June 19, 2020 12:45 pm Reply
  • ?????? I did What u did in the video and I got the same npv but +$200k? So:
    222 841,93 and 222 416,13???

    Chris June 19, 2020 12:45 pm Reply
  • this music is too boring!

    Patrícia Fernandes June 19, 2020 12:45 pm Reply
  • How do I compute this Yearly?

    MICHAEL JOSEPH TANO June 19, 2020 12:45 pm Reply
  • Giggity Goo

    Angus MacDonald June 19, 2020 12:45 pm Reply
  • mind asking, why does the 7% discount rate need to be divided by 12?

    nurshahirah rahim June 19, 2020 12:45 pm Reply
  • You just copied this video from LinkedIn Learning Solutions, and you're both wrong… You do not divide the interest rate by 12. Watch any other video, use a financial calculator, or calculate each year's present value manually and then subtract the initial investment to see you are just wrong…

    lbisthebestband June 19, 2020 12:45 pm Reply
  • Awesome! Thanks

    Yenisleidys Duarte June 19, 2020 12:45 pm Reply
  • thanx brother

    The Tycoon Mindest June 19, 2020 12:45 pm Reply
  • by the way. the two investments should have the same life. To evaluate two investments that have different life is used a method called replacement chain.

    Alessandro de Domenico June 19, 2020 12:45 pm Reply
  • You sound lie Quagmire.

    AJ Belaid June 19, 2020 12:45 pm Reply
  • Why discount rate is divided by 12?

    Žilvinas Dragūnas June 19, 2020 12:45 pm Reply
  • Love the background music, where can I download the sound FXs?

    Michael Leahy June 19, 2020 12:45 pm Reply
  • get rid of that music please

    mykell gold June 19, 2020 12:45 pm Reply
  • nice video

    Leela S June 19, 2020 12:45 pm Reply
  • Looks EXACTLY like an example I saw on Lynda.com Which of you is the original author here?

    Steve Cannariato June 19, 2020 12:45 pm Reply

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