Microsoft Office Tutorials and References
In Depth Information
The formulas in column D use the discount rate (in cell D3) to calculate the present values. For example, the
formula in cell D6 is
=PV($D$3,A6,0,–B6)
The sum of the values in column D is equal to the NPV.
For serious applications of NPV and IRR functions, it is an excellent idea to use this type of cross-checking.
Irregular Cash Flows
All the functions discussed so far — NPV, IRR, and MIRR — deal with cash flows that are regular. That is,
they occur monthly, quarterly, yearly, or at some other periodic interval. Excel provides two functions for deal-
ing with cash flows that don't occur regularly: XNPV and XIRR.
Net present value
The syntax for XNPV is
XNPV(rate,values,dates)
The difference between XNPV and NPV is that XNPV requires a series of dates to which the values relate. In
the example shown in Figure 12-11, the NPV of a series of irregular cash flows is found using XNPV.
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